The government was unlikely to make any fresh moves on consolidation of public sector banks for now, and would rather wait for banks to make the next move, a person close to the development said today.
“It (consolidation of public sector banks) will be on the backburner for sometime at the government’s end,” he said.
Last week, finance ministry officials had met heads of five public sector banks — Punjab National Bank, Union Bank of India, Bank of Baroda, Canara Bank and Bank of India —to explore the possibilities of merger among state-owned banks.
“The idea (of the meeting) was to generate public debate. The expectation is that something serious will come out of it,” he said.
The government also seems to be wary of the negative publicity the move has generated.
The bank unions have called for a rally to Parliament on December 3 and a strike on December 16 to oppose consolidation.
The source said the government’s intention was to create 8-10 large public sector banks with pan-India imprint.
Currently, there are 21 public sector banks in the country.
“The government is not looking at creating global banks as the merger of large public sector banks is not possible,” the person said.
The aim is to do away with weak public sector banks by merging them with a stronger bank.
According to him, the government was yet to formally consult the Reserve Bank of India on the issue.
The consolidation debate was ill-timed, said RBI Deputy Governor KC Chakrabarty on Wednesday.
