RBI Deputy Governor K C Chakrabarty favours financial inclusion not bank mergers

MUMBAI: Reserve Bank Deputy Governor K C Chakrabarty today said financial inclusion should be the priority in India, not consolidation of banks.

"Financial inclusion is more important than consolidation of banks," the senior most Deputy Governor said at an investor conference here this evening.

"I don't think it is the time for consolidation. In a society where 50 per cent of the people do not have bank accounts, and 90 per cent of them do not have access to bank credit, and 99 per cent do not have access to capital account, you cannot talk of consolidation," he said.

A slew of sectoral watchers have been talking of consolidation and stressing on the need for some amalgamations in the state-run banking space which has 26 players.

Those making a case for a consolidation point out towards the similarities in product offerings and there being little scope for product differentiation.

Finance Minister P Chidambaram, a votary of consolidation in the key sector, has mooted the idea of having a few banks of international size, "which would have the wherewithal to fuel the aspirations of the country."

"We must create at least two-three world-size banks. China has done it... we must also have one or two world size banks and some consolidation is inevitable," he had said.