Letter to BS: Merger is not panacea to remove all economic ills of the PSBs

Even the merger of weak entity with a strong one has to be such that the merged entity is able to absorb the shock within a reasonable period of time

Faced with a mounting non-performing loans owing to a variety of reasons and resulting in depleting profitability, the health of the public sector banks (PSBs) have indeed been a matter of concern. They control about 70 per cent of the assets in the banking system and are the backbone of Indian economy and hence, it is necessary to restore their health soon. There are now talks about the mergers in the public sector banking space. Merger is not the panacea to remove all the economic ills of the PSBs. It will hold well as long as there are synergy and