Minister of State for Finance Shiv Pratap Shukla stated that the government has asked the Reserve Bank of India (RBI) for views as well as suggestions regarding the possibility of merger among public sector banks (PSBs) in a bid to achieve synergy and scale operation. He also said that there is no timeline has been fixed for merger of the PSBs.
Shukla has highlighted that last year, the government has constituted an Alternative Mechanism (AM) comprised of three ministers, to facilitate consolidation among the PSBs to create strong and competitive banks to meet the credit needs of a growing economy, absorb shocks, and have the capacity to raise resources without depending unduly on the state exchequer. Besides, it said that the proposals received from banks for in-principle approval to formulate schemes of amalgamation shall be placed before the institution although there is no proposal for consideration before it.
The minister has stated the government has sought comments of respective state governments and sponsor banks on a roadmap for amalgamation of Regional Rural Banks (RRBs) within a state with a view to enable Regional Rural Banks (RRBs) to minimize their overhead expenses, optimize the use of technology, enhance the capital base and area of operation and increase their exposure.
He further said that the roadmap has been prepared in consultation with National Bank for Agricultural and Rural Development (NABARD) and proposes to bring down the number of RRBs to 38 from the present 56. He added that it is expected that the proposed amalgamation of RRBs will bring about better scale-efficiency, higher productivity, robust financial health, improved financial inclusion and greater credit flow to rural areas.
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