Large and strong 4-5 big banks aim to be the biggest lender of the country
(), said the official who requested anonymity.
At present, there are seven large public sector banks and five small banks.
“The concerned banks have been asked to submit their response by the end of the month. We will have extensive consultations with the Indian Banks’ Association (IBA) and other stakeholders before consolidating our future strategy,” the person said.
In 2019, the government had announced the merger of 10 nationalized banks into four major lenders, reducing the number of public sector banks (PSBs) to 12. There were 27 state-run lenders in 2017. The merger became effective from April. 2020.
Earlier this week, a report on the privatization of public sector banks by National Council of Applied Economic Research ,NCAER) made a case for privatization of all PSBs except SBI.
Report authored by NCAER Director Poonam Gupta and Economist Arvind Panagariya Noted that PSBs have lagged most of the private banks in all key indicators of performance during the last decade. “They have seen bad loans and operating costs rise,” he said. “These PSBs have achieved lower returns on assets and equity as compared to their private sector counterparts.”
However, the finance ministry official said that state-owned banks have improved their performance on all key indicators over the years and doubled their profits in FY22.
“The government will continue to maintain its presence in this sector, though we want to bring down the numbers from the existing 12 banks to around 4-5,” the official quoted above said.
The government will introduce a bill in the upcoming monsoon session of Parliament to make amendments to facilitate privatization of public sector banks.