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The Finance Ministry has appointed SBI Capital Markets to undertake a study on mergers as well as recapitalisation of state-owned banks and the report is likely to be finalised within a month.
"We have asked SBI Caps to do a study... We have given them two assignments. One is on the recapitalisation and other on bank consolidation. I hope within a month or so we will be getting something," Financial Services Secretary G S Sandhu told reporters here.
He said the government is yet to receive any formal proposal with regard to bank mergers.
"No formal decision has been taken but many suggestions are coming. One, of course, the State Bank of India (SBI) with one of their subsidiaries. (We are) working on that," he said.
Talks have been on for long to merge SBI's subsidiaries with the parent bank.
SBI first merged State Bank of Saurashtra with itself in 2008. Two years later in 2010, State Bank of Indore was merged with SBI.
The country's largest lender has five associate banks -- State Bank of Bikaner and Jaipur, State Bank of Travancore, State Bank of Patiala, State Bank of Mysore and State Bank of Hyderabad.
Among these, State Bank of Bikaner and Jaipur, State Bank of Mysore and State Bank of Travancore are listed entities.
On government stake dilution in PSU banks, Sandhu said it is more likely to happen in tranches based on the requirement of funds.
"We will go to the Cabinet. We will apprise the Cabinet. We will take a nod from them... It will be a combination of FPO and in some cases it will be QIP and some will be retail," he said.
The Budget has set aside Rs 11,200 crore towards recapitalisation of PSU banks.
