Panel for clear policy on mergers in banking sector

NEW DELHI: A Parliamentary panel has asked the government for a clear policy on mergers and consolidation in the banking sector. The Standing Committee on Finance, headed by former finance minister Yashwant Sinha, remarked that government’s approach of acting only as a supporter is ambivalent. “The committee feel it to be expedient on the part of the government to make an in depth analysis of the issues relating to mergers and consolidation of public sector banks in general,” it said.

The government has maintained that any proposal for merger within the public sector banks should come from the management of the banks themselves and the government being a common shareholder will only play a supportive role. The committee also raised doubt over merger of subsidiaries of State Bank of India with the parent bank, in the light of issues relating to manageability of large-sized banks.

The finance ministry had argued that a large-sized bank will be able to cater to the growing needs of the corporate houses, failing which such clientele and their business will be taken over foreign banks.

The committee also raised question over rising non performing assets in the SBI group of banks and said that amendments should be made in the State Bank of India pension fund rules.