More bank mergers in offing?

By Prakash Chawla
New Delhi, September 30 , 2021 When Finance Minister Nirmala Sitharaman said that India needs four or five more banks of the size of the State Bank of India, an indication was dropped how more of consolidation is in the offing amongst the public sector lenders.

Addressing the Indian Banks’ Association on September 26, 2021 in Mumbai , the FM said, ” The way in which the economy is shifting to a different plane altogether, the way in which industry is adapting, so many new challenges keep arising. To address these challenges, we need not just more, but bigger banks.”

Having already merged 10 such banks into four in the recent past, the government has also made it clear that it intends privatising banks. That would require value creation before the NPA-laden banks could fetch price for the government.

Her reference to recent amalgamation of banks should be seen in that context, even though she would have genuinely been appreciating bankers for their efforts in making the mergers seamless and least disruptive for the customers and employees.

“I commend that you ensured that amalgamation did not inconvenience customers, you ensured that systems of different banks spoke to each other, you have kept yourselves available during the pandemic in serving customers, while also ensuring that banks’ amalgamation happened without friction, without aberrations”, she said.

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