Consolidation among public sector banks exempted from scrutiny

NEW DELHI: The government has exempted consolidation among public sector banks from the scrutiny of competition authority. The exemption will cover all cases of reconstitution, transfer of the whole or any part of nationalised banks and will be available for a period of 10 years.

In a gazette notification, the provisions of Sections 5 and 6 of the Competition Act, 2002 will not apply in these cases.

Sections 5 and 6 of the Competition Act regulate ‘combinations’, and requires prior notification and approval of the competition watchdog. The union cabinet had last week given in-principle approval for public sector banks to amalgamate through an alternative mechanism. A panel of ministers will decide on merger proposals.

“The decision would facilitate consolidation among the nationalised banks to create strong and competitive banks,” the government had said in a statement. The government is expected to nudge state-run bank to come with merger and consolidation proposals to the alternate mechanism.