Finance
Minister Arun Jaitley on Monday said India needs fewer and mega banks to
achieve economies of scale in the sector.
After the
amalgamation of five associates and Bharatiya Mahila Bank with SBI in 2017, the
government earlier this year approved the merger of Dena Bank and Vijaya Bank
with Bank of Baroda.
“With the
experience in the past really has been of SBI merger, now it is second one
which is taking place,” Jaitley said after the customary post-budget address to
the RBI board.
“India
needs fewer and mega banks which are strong because in every sense, from
borrowing rates to optimum utilisation, the economies of scale as far as
banking sector is concerned are of great help,” he said.
The Union
Cabinet last month approved the merger of the three banks to create the
country’s third-largest lender after SBI and ICICI Bank.
The
amalgamation, the first-ever three-way consolidation of banks in India, would
be effective from April 1, 2019.
After the
merger, the number of public sector banks will come down to 18. In
September 2018, the Alternative Mechanism, headed by Jaitley, gave in-principle
approval for the merger of the three banks to create a global-sized lender.
It will take months and months as all to be merging banks have different os as well as different cultures.
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