FM to meet with PSU banks to discuss ways to solve bad loan problem.
New Delhi: After SBI merger, the Centre is keen to undertake one more such merger in the current financial year among PSU banks with the aim to create 4-5 global sized lenders.
Earlier this year SBI merged into itself five associate banks and Bharatiya Mahila Bank, making it part of the league of top 50 banks in the world.
“Consolidation is a must... but decision in this regard would be based on commercially prudent parameters. If the NPA situation gets better, there could be one more merger towards the end of this fiscal,” a senior official told a news agency here.
The official said that there should not be merger of a very weak bank with a strong bank “as it could pull the latter down.” “There are some low-hanging fruits. Big lenders like Bank of Baroda can take over some turnaround banks in the southern region such as Indian Overseas Bank. Dena Bank could be merged with some large South Indian bank,” he said.
The official said that whenever consolidation happens, it will take into consideration interest of all stakeholders including employees and shareholders. Toxic loans of public sector banks rose by over Rs 1 lakh crore to Rs 6.06 lakh crore during April-December of 2016-17, the bulk of which came from power, steel, road infrastructure and textile sectors.
Meanwhile, Arun Jaitley is meeting with the chiefs of public state banks on Monday among other things to discuss how to resolve their non performing assets (NPAs).
This will be the first meeting in the current financial year 2017-18 which will be chaired by the finance minister.
Mr Jaitley has said in past that India needs 5-6 banks of global size and scale and further consolidation in the banking sector will be done at the appropriate time.
Finance Ministry has sought help of the government think-tank NITI Aayog and global consultancy firms to examine the possibility of next round of consolidation of PSU banks with an aim to create a few lenders of global size and scale.
State Bank of Bikaner and Jaipur (SBBJ), State Bank of Hyderabad (SBH), State Bank of Mysore (SBM), State Bank of Patiala (SBP) and State Bank of Travancore (SBT), besides BMB, were merged with SBI.