Banking Sector Consolidation:  Modi Government’s New Push To Create Mega BanksPrime Minister Narendra Modi and Finance Minister Arun Jaitley. (STRDEL/AFP/Getty Images)

The Union government may cut the number of public sector banks to 12 from the existing 21 in the medium term, the Financial Express has reported, citing sources.

According to the daily, the government may set up three to four global-sized banks and reduce the number of state-owned lenders to about 12 as a part of its consolidation agenda. In June, Finance Minister Arun Jaitley said the government is “actively working” towards consolidation of public sector banks but declined to provide details, saying this was a price-sensitive information.

According to the source quoted by the daily, region-centric banks such as Punjab and Sind Bank and Andhra Bank will continue to operate as independent entities while some mid-size lenders would also remain.

Five associate banks and Bharatiya Mahila Bank became part of State Bank of India in the last consolidation drive that ended on 1 April, making it one of the top 50 banks in the world. The Finance Ministry is considering clearing another such proposal by this fiscal if bad loan situation comes under control. Public sector banks are sitting on a mountain of bad loans to the tune of over Rs 6 lakh crore .

An Appeal...

Dear Reader,

As you are no doubt aware, Swarajya is a media product that is directly dependent on support from its readers in the form of subscriptions. We do not have the muscle and backing of a large media conglomerate nor are we playing for the large advertisement sweep-stake.

Our business model is you and your subscription. And in challenging times like these, we need your support now more than ever.

We deliver over 10 - 15 high quality articles with expert insights and views. From 7AM in the morning to 10PM late night we operate to ensure you, the reader, get to see what is just right.

Becoming a Patron or a subscriber for as little as Rs 1200/year is the best way you can support our efforts.

Become A Patron
Become A Subscriber
Advertisement