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Chidambaram bats for merger of PSBs to create 2-3 global entities

21 May 2013 Evaluate

Finance Minister P Chidambaram has expressed the need for merger among the public sector banks (PSBs) so that India can have two-three global sized banks. During an event of Competition Commission of India (CCI), Chidambaram said ‘the need for two or three world-sized banks in an economy that is poised to become one among the five largest in the world is rather obvious’.

By adding further, Chidambaram said that mergers may reduce competition in certain segments of banking operations and may also alter competition between banks and non-banks.  Further, moving a step closer to the banking merger, the Reserve Bank of India (RBI) has also said that it would release a discussion paper on banking structure in India by end-June 2013.

The discussion paper would cover issues such as consolidation of large-sized banks with a view to having a few global sized banks and desirability and practicality of having small, localized banks as preferred vehicles for financial inclusion.

Presently, the country's largest lender State Bank of India has acquired board approval for the merger of its remaining five associates with itself. It has already amalgamated two of its subsidiaries - State Bank of Saurashtra and State Bank of Indore.

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