Mergers no quick fix for banking sector issues, says Assocham

Government should focus on making the banking system stronger and give them independence to find their own solutions instead of stressing on mergers, industry body Assocham said in a report released here on Wednesday. "Mergers or consolidation of the public sector banks is certainly no answer to the present crisis, which can only be resolved by professionalising these banks with the government keeping an arm's length," Assocham President Sunil Kanoria said while presenting the report. The body has brought out the paper on 'Convergence, Not Consolidation Answer for Public Sector Banks' which suggests that there are no quick fixes for grave problems in the public sector banking. "Overall the economy is doing good, government has done a lot in the last two years, but investment specially in the private sector is not picking up. The solution to the problem lies differently. Instead of merging of the PSBs, the focus should be to make them stronger and larger," Kanoria said.

The report says that the government should at the present juncture look at strengthening the banking system. With some high profile borrowers getting into litigation and facing criminal probes, the public discourse puts additional pressure on the government, to find some quick fixes for the NPA ridden banks, which find themselves terribly constrained to improve lending with the credit growth well below 10 per cent, the report said.