Money & Banking

‘Consolidation, must for banks of global size’

Our Bureau Pune | Updated on March 12, 2018

Finance Minister, P. Chidambaram, said that while consolidation takes place among top banks, there would also be place for local area banks.

Finance Minister P. Chidambaram stressed that banks must be open to consolidation so that the county has at least two-three banks of international size.

“We must create at least two-three world-size banks, even China has done it,” Chidambaram said. He added that new business models will inevitably lead to some consolidation. Even while consolidation takes place among top banks, there will be enough space for local area banks, he opined.

In 1998, RBI-appointed Narasimham Committee on Banking Sector Reforms had recommended restructuring of the banking system to create three-four large banks, which could become international in character, and 8-10 national and local banks. No serious attempt at consolidation in the public sector banking space has happened, though.

Opposed to UNIFORMITY

Chidambaram said because there is a regulator and a Department of Financial Services, there is an unintended tendency to stress on uniformity among public sector banks. “I am opposed to uniformity. I don’t think one bank should or can be a clone of another.” Each bank has its own strength and distinct regional flavour. He said there is a need to differentiate between banks and the regional rural banks they sponsor.

>satyanarayan.iyer@thehindu.co.in

Published on November 24, 2012

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