Anchor banks to be identified to lead consolidations of PSBs

Bank consolidation, Vinod Rai, Arun Jaitley, Finance Ministry, banking sector

The government may identify six to ten public sector banks which may drive the consolidation process among the state-owned banks. To be called anchor banks, they may be identified by October 31, 2016. Large lenders like State Bank of India (SBI), Bank of Baroda (BoB), Punjab National Bank (PNB) and Canara Bank could become anchor banks.

The government may be expected to set up an expert panel for the consolidation process. The Bank Board Bureau headed by former Comptroller and Auditor General (CAG) Vinod Rai, which was recently formed to select chief executives and board members of public sector banks, will also help in the consolidation process.

Merger between the banks will be based on geographical and technological synergies, human resources and business profile, among others. The idea of bank consolidation was discussed at length during the ‘Gyan Sangam’ bankers’ retreat at Gurgaon last week. Top finance ministry officials, bankers and Reserve Bank of India (RBI) officials were present during the discussions.

The idea of consolidating public sector banks has been discussed for about a decade now.The previous United Progressive Alliance (UPA) government also wanted consolidation among public sector banks but had maintained that such a proposal should come from bank boards.

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