Cabinet nod for merger of PSBs

Alternative mechanism to be set up

The Centre on Wednesday gave a go ahead for setting up an alternative mechanism to oversee proposals of public sector banks’ (PSBs) merger, with the aim of consolidating a large chunk of strong lenders.

The decision which was taken by the Union Cabinet, is focussed on meeting the credit needs of the growing Indian economy and building capacity in the PSBs space to raise resources without dependence on the state exchequer, official sources said.

The Cabinet has given in-principle approval for public sector banks to amalgamate through an Alternative Mechanism, they added.

“The decision would facilitate consolidation among the Nationalised Banks to create strong and competitive banks,” a statement said.

Speaking to the media, Arun Jaitley said that the alternative mechanism will oversee the proposals coming from boards of PSBs for consolidation. “You have large number of banks in the public sector. The object is to create strong banks. Our experience of consolidation has been positive so far,” he said, adding that it enables a quick facilitation.

The decision to set up the mechanism follows SBI merging its five associate banks with itself.

Mr Jaitley said the decision regarding creating strong and competitive banks will be “solely based on commercial considerations”.