Chidambaram in favour of merging public sector banks

Union Finance Minister P Chidambaram has stated that the 26 State-owned lenders may be better to be merged.
Some banks, including among the 26 public sector banks that the country has, may be better off merging, Chidambaram said in his inaugural lecture on the occasion of Annual Day of Competition Commission of India. The need for two or three world-sized banks in an economy that is poised to become one among the five largest in the world is rather obvious, he added.

Chidambaram, in the past too, had spoken in favour of consolidation in the banking sector. However, the earlier stance was that it would be upto the banks to decide their partners and the Finance Ministry would only ‘bless’ such mergers.

Incidentally, KPMG in a report released last weekend also said that India critically needs at least three to four large banks that are globally competitive and can meet the growing demands for cross-border acquisitions by the Indian corporate and take on larger-ticket risks on their balance sheets without hitting limits.