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The Ministry of Finance dusted off public sector merger proposals and began weighing various options to create a few more banks of the size of the State Bank of India (SBI), sources said. The month had made two presentations to the heads of other public sector lenders to share its experience of consolidating five badociated SBI banks and Bharatiya Mahila Bank with itself.
The presentation talked about the benefits and challenges of the merger. banks act as an obstacle to their growth.
Various permutations and combinations are examined, sources said, but they add that no decision has yet been taken.
Regarding the reduction of the participation of IDBI Bank, The development has already taken place.
Last week, the insurance regulator, the Regulatory Authority and Insurance Development of India, allowed LIC to AID in IDBI Bank as part of the Lender Transformation
Last year, the Department of Financial Services had written to all PSU lenders to inform them of the government's decision to create a ministerial panel to facilitate consolidation in the public banking area
The government has pushed the state lenders to opt for the merger so that there may be fewer banks and stronger
The Ministry wants the banks to undertake an internal exercise for the best match and propose the merger.
Banks should badyze regional balance, geographic reach, computational compatibility, financial burden, and human resource transition while strengthening the merger proposal for the ministerial panel.
Last year, the Cabinet of the Union decided in August to put in place an alternative mechanism to oversee the proposals for the rapid consolidation of public sector banks in order to create a larger lender and more strong.
The proposals received from the banks for the approval in principle to formulate merger schemes will be presented to the panel.
To accelerate consolidation, the government exempted nationalized bank mergers from seeking fair trade monitoring KICs.
This derogation will be applicable for ten years and comes at a time when several experts and even policy makers have raised the need to consolidate the banking sector, especially among public banks.
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