Further consolidation in PSU banks after improvement in NPA

Days after the Cabinet approved merging five associate banks with SBI, finance ministry officials on Monday said further consolidation in public sector banking may have to wait till the bad loans situation improves. The government may not like to go in for further consolidation in public sector banks till the NPA situation improves, sources said.

Merging PSU banks at their current health is not a good option as it has potential to undermine the performance of the merged entity, officials added.

Meanwhile, heads of the top 10 PSU banks, including SBI, PNB and BoB, had a meeting with the Finance Minister where host of issues where discussed, including the NPA situation, capital infusion and GST implementation from the banks’ perspective. According to sources, the arrest of bankers by investigating agencies also came up during the meeting.