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Mergers not for the sake of mergers: Mundra

S.S. Mundra, deputy governor of the Reserve Bank of India favored consolidation in the banking sector but maintained that mergers should not be just for the sake of mergers but it should be a focused exercise and done in a strategic manner. He said a merger should be done if it results into geographical integration, giving banks a wide geographical spread and enhance their product range, among others. He said merger between a strong bank and a weak bank may happen but in the process rather than supporting the weak bank, it may end up making the strong bank a weak one, he said. Mundra also said banks should not be giving excessive focus on retail lending as the segment cannot be the panacea for growth and that too much of retail lending would also create its own problems.

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