Free the banks

Mergers are cosmetic without real governance reform

Union Finance Minister Nirmala Sitharaman on Friday announced that the government planned to merge 10 public sector banks (PSBs) into four. The government hopes thereby that the state-controlled section of the banking sector, which has long been under pressure due to stressed balance sheets, will find itself strengthened if these banks pool their resources. Combined with the front-loaded recapitalisation of PSBs announced earlier, the government clearly hopes that larger banks will recover some of their risk appetite and step up lending to the productive sectors of the economy — which would, in turn, spark an economic revival. The plan for