RBI advises caution in meger of commercial banks

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RBI supports mergers among commercial lenders but they have to be focused and strategic, RBI Deputy Governor S S Mundra has said.

Speaking at a business school on on Dec 14, 2015 in Mumbai, Mundra warned that merging a weak bank with a strong one might weaken even the stronger lender.

He further said, “I would believe merger for the sake of merger really would not serve the intended purpose.”

India has over two dozen state-run banks that dominate its banking landscape. The government has said that it will not force consolidation, but several weaker banks are expcted to merge with rivals.