A BEGINNING IS MADE ON PSU BANKING MERGERS…

      The Cabinet on August 23rd gave an in-principle approval for initiating the process of merger of PSU banks. The idea has been under discussion for the last few months and the reasons are not far to seek. Firstly, there is a lot of duplication in the network and operations of most of the PSU banks and hence having so many banks did not add much value. Secondly, banking is increasingly becoming a business that is technology driven and less dependent on geographical presence. Therefore, having so many PSU banks with presence across the length and breadth of India was not required. Lastly, if PSU banks have to survive they need size and a solid balance sheet. In the current situation, this is difficult on a standalone basis considering the weak credit growth and high level of NPAs. The answer lies in merging these PSU banks into smaller clusters to make them more nimble and more competitive. It is in this light that the Cabinet approval needs to be seen.

                                                                                                                                Source:-Angel broking Blog.