Central Government decided to lower number of public sector banks to 10-15: FinMin advisor
According to the latest report from Finance Ministry, India
will have 10-15 public sector banks with government's majority stake, down from
21 at present, as part of its plan to consolidate banks.
Te main purpose is to clean up of the bad loan problems is
the first priority and after that the PSU banks could be consolidated.
As part of the clean up process, the RBI has already started
recognising the bad assets, provision them and is taking some of them to
bankruptcy and insolvency process.
Recapitalisation bonds is one of the options for infusing
capital into banks, he said, adding that the government could also dilute its
stake in some lenders to 52%.
In the last consolidation drive, five associate banks and
Bharatiya Mahila Bank (BMB) became part of State Bank of India (SBI) on April
1, 2017, catapulting the country's largest lender to among the top 50 banks in
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 BMB, were merged with SBI.
As per S&P Global Ratings, PSU banks will need at least
Rs 1.9 lakh crore additional capital by March 2019 as the lack of it will
restrict their ability to write down non-performing loans.