Mumbai : Reserve Bank Deputy Governor S S Mundra supported consolidation in the banking sector but said it has to be a focused exercise. He said the decision on merger should come from “within the organisation and from the Board.”
“I believe that merger (of banks) for the sake of merger only would not serve the intended purpose. Yes, there can be a room for merger to bring in new entities but it has to be a very focused thing and should be done strategically”, Mundra said.
He said merger should be done if it results into geographical integration, giving banks a wide geographical spread and enhance their product range, among others.
There are 27 public sector banks, including State Bank of India’s five associate banks, in the country.
Talks have been going on for long for merging SBI’s subsidiaries with the parent bank. SBI first merged State Bank of Saurashtra with itself in 2008. Two years later in 2010, State Bank of Indore was merged with SBI. The country’s largest lender has five associate banks — State Bank of Bikaner and Jaipur, State Bank of Travancore, State Bank of Patiala, State Bank of Mysore and State Bank of Hyderabad.
