RBI governor Urjit Patel said there is scope for a consolidation in the banking sector in India and feels the banking system in the country would be better off if some public sector banks are merged. Delivering the Kotak Family Distinguished Lecture at Columbia University recently, he said it is not clear that India needs so many public sector banks. The system could be better off if they are consolidated into fewer but healthier banks, he added. Such a consolidation can happen, he said, since the country has cooperative banks and micro-financial institutions to provide community-level banking. This could also address the prevailing stressed assets situation in the banks, he added. He also told the audience that a series of measures have been initiated in the past year on resolving the problem of the non-performing assets, including completion of a comprehensive asset quality review of the banks.
