The proposed merger of state-owned banks in India has received in-principle approval from the country’s union cabinet.
“The cabinet approved the constitution of an alternate mechanism that will oversee proposals with regard to consolidation of banks, which will come from the PSBs (public sector banks),” finance minister Arun Jaitley said in a press conference.
The alternate mechanism looking after the amalgamation process will include a panel of ministers.
The proposals for merger have to be from the boards of the banks concerned, Jaitley stated, adding that the merger decisions would be based on commercial considerations.
“The objective is to create strong banks and the experience of bank mergers has so far been positive,” the finance minister added.
The government has however, not yet revealed any details on which banks will be merged.
Currently, there are 21 PSUs in the country of which State Bank of India (SBI) recently consolidated with five of its associate banks and the Bharatiya Mahila Bank. The SBI merger was cleared by the cabinet in June 2016.