Initiative for merger of public banks has to come from their Boards: Jayant Sinha

The initiative for merger of PSU banks has to come from boards of the banks concerned and the government's and RBI's role would be that of a facilitator, Minister of State for Finance Jayant Sinha on Tuesday said.

"As far as merger of banks are concerned, any initiative with respect to merger of public sector banks has to come from the Boards of the banks concerned, the extant legal framework, keeping in view the synergies and benefits of merger and their commercial judgement," Sinha said in a written reply in Rajya Sabha.

He further said government's and Reserve Bank's role in the merger of the banks would be that of a "facilitator". The guiding principle for the consolidation process of banking in India has so far been the Narasimham Committee.

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According to it the move towards restructured organisation of the banking system should be market-driven based on profitability considerations and brought about through a process of mergers and amalgamations. In his Budget speech, Finance Minister Arun Jaitley had said that government will unveil a roadmap for consolidation of public sector banks (PSBs).