Govt to initiate merger of PSBs after Q1 numbers

The finance ministry is expected to initiate the process of consolidation of public sector banks (PSBs) once the first quarter results of the current fiscal year (FY18) have been announced, said a senior official.

There are various aspects, including financial performance, which have to be looked at before a merger decision is taken, said the ministry official.

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 there should not be a merger of a very weak bank with a strong one as it could pull the latter down.

“It is going to be a complex exercise. Let the June quarter numbers of all banks be finalised first. Then there could be some action on this front,” said the official.

The finance ministry had called a few banks, including Dena Bank, some months ago to get a sense about their financial position like capital adequacy ratio, NPAs and core banking software solution that they operate on.

The government had, however, said last week that there is no proposal for consolidation of PSBs at present. “There is no such proposal under the consideration of the Centre for consolidation of PSBs,” Minister of State for Finance Santosh Kumar Gangwar had said.

In the last consolidation drive, five associates and Bharatiya Mahila Bank (BMB) became part of State Bank of India (SBI) on April 1, catapulting the country’s largest lender to among the top 50 banks in the world. State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala and State Bank of Travancore, besides BMB, were merged with SBI.