Govt Likely To Lower Number Of Public Sector Banks To 15

By Nithya Nair
Subscribe to GoodReturns
For Quick Alerts
Subscribe Now  
For Quick Alerts
ALLOW NOTIFICATIONS  
For Daily Alerts

    India will have 10-15 public sector banks with the government as the majority stakeholder, from 21 now, as part of its plan to consolidate lenders, finance ministry's principal economic advisor Sanjeev Sanyal said.

    He said cleaning up of the bad loan problems was a priority, and after that, the PSU banks could be consolidated. Ten Banks That Have Slashed Interest Rates On Savings Bank Accounts

    "There are around 21-22 PSU banks. The numbers will be reduced in terms of consolidation, but somewhere to the 10-15 range. We are not going to take it too far down...We need to consolidate some of these large numbers of banks, but be clear that we are not going to reduce these down to some people think like four to five national champions," Sanyal said at the India Economic Summit .

    Govt Likely To Lower Number Of Public Sector Banks To 15

    "We recognize that it will lead to too many 'too-big-to-fail' banks. Currently, we have one large bank, State Bank of India... We do not want to create a large number of them. Then we will have a real problem in terms of concentration of risks,"
    He said consolidation of banks is a longer-term commercial decision, whereas recapitalization of PSBs is "more an urgent issue" in order to get the banking system running again.

    Adding inefficient banks does not lead to a bigger efficient bank. So, the cleaning up of the bad loans problem is the priority, he said.

    As part of the cleanup process, the Reserve Bank of India has already started recognizing bad assets, provision them and is taking some of them via bankruptcy and insolvency process.

    "Now, the second step consequently is recapitalization and getting these banks running again... that will be done in next few months. The government is fully aware that we need a much larger banking system by factors of multiple than what it is today," Sanyal said, adding India's banking system is way too small for future and needs to be expanded significantly.

    Recapitalisation bonds is one of the options for infusing capital into banks, he said, adding that the government could also dilute its stake in some lenders to 52 per cent.

    Goodreturns.in

    Read more about: public sector banks merger
    Story first published: Saturday, October 7, 2017, 9:53 [IST]
    Company Search
    Enter the first few characters of the company's name or the NSE symbol or BSE code and click 'Go'

    Find IFSC

    Get Latest News alerts from Goodreturns

    We use cookies to ensure that we give you the best experience on our website. This includes cookies from third party social media websites and ad networks. Such third party cookies may track your use on Goodreturns sites for better rendering. Our partners use cookies to ensure we show you advertising that is relevant to you. If you continue without changing your settings, we'll assume that you are happy to receive all cookies on Goodreturns website. However, you can change your cookie settings at any time. Learn more