The Government of India has sought the suggestions of the Reserve Bank of India (RBI), the central banking authority of the country, on the potentiality of mergers among the public sector banks.
The Union Minister of State for Finance Shiv Pratap Shukla said in a written reply to the Rajya Sabha, the upper house of the parliament, that the government has RBI to examine the feasibility of state-owned banks’ mergers to achieve synergy and scale.
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However, he did not specify any specific timeframe on the possible India public sector merger of these lenders.
India public sector merger
As there can be multiple approaches on the possible combination, RBI suggestions may help to devise the proper plan, the minister added.
The mergers among the public sector banks are expected to create stronger entities improving their risk profiles.
The government has already made an Alternative Mechanism (AM) consisting of three ministers to facilitate the merger process of the lenders.
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By GlobalDataAll merger proposals to the AM can be made by the respective boards of the banks and it should be based on commercial viability.
Following the proposals from the bank, the AM will seek advice from the RBI before awarding in-principle approval.
Currently, AM has no such proposals of merger from the public sector banks.
