PNB sees little scope for M&As

The banking sector will have to wait for another two to three years to see a consolidation (mergers and acquisition) as the country still has huge under-banked population to be served as a priority and a limited suite of financial products and services, according to Punjab National Bank (PNB) Chairman and Managing Director K C Chakraborty.

Just 30,000 villages out of 6,00,000 had bank branches. In this backdrop, financial inclusion became a priority. The consolidation was apt for the system to gain scale, but only after 2010, Chakorborty said in response to a query on moves for M&As in the sector.

The owner could take a lead on the consolidation (M&As), he said. The owner, in the case of public sector banks, is the central government.

This is in contrast with what Union Finance Minister P Chidambaram has been saying, nudging public sector banks to take an initiative to consolidate.

Referring to PNB's foray into the life insurance sector and the fate of the three-way joint venture with Principal and Bangalore-based Vijaya Bank, he said the bank was reviewing business operations of all JVs and subsidiaries and a clarity on insurance venture was expected in the next three to six months.

The bank would look at all options, including salvaging the existing JV for the life insurance business and starting afresh on this front, he added.

On the international business forays for public sector banks, he said, "PNB will expand overseas to gain international exposure and expertise. Our customers are becoming global and would like to do hand-holding for them as well as retain the client base."