FM for consolidation in banking

Finance Minister P Chidambaram today stressed on consolidation in the banking sector. He said the government will consider proposals that were cleared by boards of nationalised banks and supported by employees.

"We are proud that the State Bank of India is India's largest bank. But it is not Asia's number one bank or amongst the top global banks. That is why we are pushing for consolidation," Chidambaram said at a function organised by State Bank of Patiala.

"Competition, convergence and consolidation will be the drivers in the future," he added.

The issue of consolidation of nationalised banks has been opposed by the Left. A proposal to merge Union Bank of India and Bank of India was put on the backburner after Left opposition. The government has repeatedly said it would not undertake any match-making but will wait for banks to find partners.

Chidambaram reiterated that the government would remain the majority stakeholder in the PSU banks.

He said the government, as the majority owner of the state-owned banks, will limit its role to two functions, with the statement of intent, setting out targets for the year, being one of them. He added that the banks would have to meet the targets set out by them.

"I am open to finding ways to treat public sector banks differently from PSUs," he said, hinting at more autonomy for these banks. The government had notified greater autonomy for the banks in February this year.

A proposal to keep senior executives out of the ambit of the CBI and CVC was under consideration, officials said. The chairman and managing director of the bank and the executive director would, however, be under scanner, they said adding that a final decision was yet to be taken.