Only SBI consolidation in FY17, says FinMin

Only SBI consolidation in FY17, says FinMin

'Unions must come on board for other mergers'

Dilasha Seth | New Delhi June 23, 2016 BUSINESS STANDARD

Amid speculation over mergers of smaller public sector banks with five to six larger ones, finance ministry officials on Wednesday said only consolidation of State Bank of India (SBI) with its associates and Bharatiya Mahila Bank (BMB) would happen this year.

"There are no talks of mergers of any other banks besides that of SBI during this financial year, as it will involve getting trade unions on board. So we cannot give timelines on more mergers yet. But they will happen in due course. It will have to be done in a fiscally prudent manner. Any consolidations besides that of SBI with the five subsidiaries are unlikely this year," said a senior government official.

The Cabinet had last week approved the consolidation of State Bank of India (SBI) and its five subsidiaries - State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala, and State Bank of Travancore. It also gave an approval for the merger of BMB with SBI.

India has 27 public sector banks, which account for 70 per cent of its banking sector assets.A news report doing the rounds earlier in the day suggested the government was considering the merger of small public sector banks with State Bank of India, Punjab National Bank, Canara Bank, Union Bank, Bank of Baroda and Bank of India. According to the report, the proposal sought merging Andhra Bank, Bank of Maharashtra, Vijaya Bank with Bank of India. The report also talked about another likely merger of Syndicate Bank, Indian Overseas Bank and UCO Bank with Canara Bank.

A senior government official in the department of financial services denied the report. "The news report of consolidation is absolutely incorrect and highly speculative. Only SBI merger will take place this financial year," said the official.

Source:AIBEA