In this regard, the merger of five associate banks and Bhartiya Mahila Bank with the country’s largest lender State Bank of India (SBI) already took place in April.
Bad loans of public sector banks increased by over Rs 1 lakh crore to Rs 6.06 lakh crore during April-December of 2016-17, the majority of which was contributed by power, steel, road infra and textile sectors.
At present, there are 21 PSU banks in the country, including State Bank of India.
According to experts, Punjab and Sind Bank can be merged into Punjab National Bank, while other big lenders like Bank of Baroda can take over some turnaround banks in the southern region such as Indian Overseas Bank. Similarly, Dena Bank could be merged with some large banks like South Indian Bank.
On privatisation of IDBI Bank, Finance Minister Arun Jaitley said that initially the government had moved substantially but the process got slowed down as it had to decide on the complicated issues related to large real estate assets of the bank in Mumbai and elsewhere.
“Can you without segregating that (real estate), sell just the banking system which in the present state is not in the best of health. That process got slowed down a little,” he added, referring to the complications.