NITI Aayog to submit report on PSU banks consolidation

The finance ministry has sought help of the government think-tank NITI Aayog and other global consultancy firms to examine the possibility of next round of consolidation of PSU banks with an aim to create only a few lenders of global size and scale.

"We expect a detailed report from NITI Aayog on consolidation in about a month or so," a senior government official told PTI, adding, some global consultancy firms are also examining the issue. The report of NITI Aayog will set tone and tenure of the roadmap for consolidation in the future, the official said.

The government intend to create 4-5 banks of SBI size, the official added. There are factors like regional balance, geographical reach, financial burden and smooth human resource transition that have to be looked into while taking a merger decision, the official said, adding, that there should not be merger of a very weak bank with a strong bank "as it could pull the latter down".

"There are some low-hanging fruits. For example, Punjab and Sind Bank can be merged into Punjab National Bank. Big lenders like Bank of Baroda can take over some turnaround banks in the southern region such as Indian Overseas Bank. Dena Bank could be merged with some large South Indian bank," the official explained. The merger process will get a boost with the likely improvement in the non-Performing Asset (NPA) situation over the next two quarters, the official said, adding that "some movement on this front would begin soon".