Asserting that insurance and pension reforms were underway, economic affairs secretary Ashok Jha today said there was a tremendous need for consolidation to enable banks gain financial muscle and absorb risks in the years to come."Mergers and acquisitions of banks will not be driven by the government. The decision to merge would be left to individual banks," he added.Jha was speaking at the India Economic Summit organised by CII and World Economic Forum."There is tremendous need for consolidation among both the public and private sector banks. Apart from giving economies of scale, they (large banks) would be in a better position to absorb the risks," Jha said.Acknowledging the fact that the banks would have to raise $11-12 billion in five years to comply with Basel-II norms and meet the increasing credit demand, he added: "While bulk of the investment would come from the domestic sector, we would like to have more investments from overseas investors."
