The government has asked the Reserve Bank of India to examine the possibility of merger of public sector banks to achieve synergy and scale operation. Stating this in Parliament, minister of state for finance Shiv Pratap Shukla said the government has not fixed any timeline for this merger. He said since various approaches involving varying processes are possible with regard to synergy/consolidation amongst PSBs, the government has requested the RBI for views as well as suggestions regarding specific possible combinations to achieve scale and synergy for appropriate consideration. The minister said the government had in 2017 set up an Alternative Mechanism comprising 3 ministers to facilitate consolidation among public sector banks to create strong and competitive entities, serving as catalysts for growth, with improved risk profile of the bank. The Alternative Mechanism will examine proposals received from banks for in-principle approval to formulate schemes of amalgamation. He, however, added that at the moment there is no proposal for consideration before it.
