Report on PSU banks’ merger to be submitted within a month

Aug 01 2014, 23:36 IST
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SummaryThe finance ministry has asked SBI Capital Markets to prepare a feasibility report on merger and recapitalisation of public sector banks

The finance ministry has asked SBI Capital Markets to prepare a feasibility report on merger and recapitalisation of public sector banks, financial services secretary Gurdial Singh Sandhu said on Thursday, adding that the report will be submitted in a month's time.

“We have given SBI Caps two assignments — recapitalisation and consolidation. I hope within a month or so we will be getting (a report),” Sandhu told reporters on the sidelines of finance minister Arun Jaitley’s meeting with chiefs of PSU banks.

Sandhu said the government had not yet received any formal proposal with regard to bank mergers, although there were many suggestions on merging banks with their subsidiaries. “No formal decision has been taken but many suggestions are coming. One, of course, (is the merger of) the State Bank of India with one of its subsidiaries. We are working on that,” he said.

SBI 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. State Bank of Bikaner and Jaipur, State Bank of Mysore and State Bank of Travancore are listed entities.

Sandhu said that while bank consolidation will be a “slow process”, recapitalisation of banks, including through dilution of the government’s stake, may start by as early as November. He saod bank stake sales may happen in tranches based on the requirement of funds. “We will approach the Cabinet for (its approval),” the official said, adding that stake diluition will be through a combination of FPO and QIP sales to retail investors. The Indian banking system needs to be infused with about R2.4 lakh crore by 2018 to meet Basel-III norms.

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