PSB mergers a credit positive move: Moody's

The government’s decision to set up a ministerial panel to consider and oversee mergers among public sector banks (PSBs) was a “credit-positive” move as the consolidation would provide scale efficiencies and improve corporate governance, rating agency Moody’s said on Monday.

The government is seeking to consolidate 21 PSBs. Last week, the Union Cabinet gave its in-principle approval for the mergers, and decided to form a panel led by Finance Minister Arun Jaitley to oversee the process. 

Such mergers, however, would not improve PSBs’ weak capitalisation in the face of lack of fresh capital infusions from the government, the agency said in a