No Mergers for Public Sector Banks: Finance Ministry
The Indian Finance Ministry has officially announced that there are no plans for the merger of public sector banks (PSBs) at this time. Minister of State for Finance, Pankaj Chaudhary, made this declaration during the Lok Sabha session, addressing speculations about merging the existing 12 PSBs into larger entities. This clarification comes amid ongoing discussions about how to enhance the global competitiveness of these banks.
The government has expressed ambitions for at least one or two PSBs to rank among the top 20 banks worldwide by the year 2047. Currently, the State Bank of India (SBI) holds the 43rd position in the global ranking of banks based on assets. This indicates a clear intent from the government to strengthen the banking sector and improve its stature on the global stage.
In recent weeks, there have been numerous reports suggesting a potential merger of the 12 PSBs, which include major banks like Bank of Baroda, Bank of India, and Canara Bank, among others. However, Minister Chaudhary's statement has put these rumors to rest, confirming that no merger proposals are under consideration. The last significant round of PSB mergers was conducted in 2019, resulting in the consolidation of 10 banks into four, reducing the total number of PSBs to 12.
Furthermore, Chaudhary addressed questions regarding the privatization of PSBs, stating that there are no current proposals, including for IDBI Bank, which had previously been highlighted for potential privatization in the 2021-22 Union Budget speech by Finance Minister Nirmala Sitharaman.
The government is also engaged in a strategic disinvestment process for IDBI Bank, which was approved in May 2021. The government and the Life Insurance Corporation of India (LIC) are offering substantial ownership stakes in IDBI, ensuring that both entities retain a significant interest post-sale. This move marks a significant step in reshaping the banking landscape in India, even as plans for mergers remain on hold.
In summary, while the government is keen on enhancing the global competitiveness of PSBs, current plans do not include mergers or privatization, focusing instead on strategic disinvestment and long-term goals.
