In a bid to set up strong and bigger banks of international level, the central government will soon engage more mergers in the state-run banking space, Finance Minister Arun Jaitley has said.
“Today banking is not what it used to be 10-20 years ago… Is it necessary to have 30-32 public sector banks, some of them weak? Obviously not. What will you do with weak banks,” said Jaitley.
“We have merged five subsidiaries of SBI and the Bharatiya Mahila Bank with SBI. I have announced that we want fewer banks but bigger and stronger banks which can be of international level. In the coming days most probably we will move faster in this direction,” he added.
The government has shown its intention of merging in the public sector banking space against the menace of the bad loans.
The move was initiated with the merger of the Bharatiya Mahila Bank and five associates lender merged with the State Bank of India (SBI) on April 1, presenting the country’s largest lender among the top 50 banks globally.
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 Bharatiya Mahila Bank (BMB), merged with SBI.
The total customer base of the bank will reach 37 crore with a branch network of around 24,000 and nearly 59,000 ATMs across the country. The new entity will have deposits of over Rs 26 lakh crore and advances the level of Rs 18.50 lakh crore.
“Normally any finance minister will tell you that there are good reasons to cut interest rates. This is an inherent desire of any finance minister. But what should be the interest rate is decided somewhere else which is the Reserve Bank of India,” the Finance Minister said.
“Inflation was in double digit before 2014 and now it has come down to 3-4 per cent range. We are with within the plus minus four per cent range. Whenever our monetary policy committee, where there are six very eminent people including the RBI Governor, they will decide and I feel we must have confidence in them. They will definitely keep in mind all the factors,” Jaitley said.