Utkal Reporter| 24 August 2017
The Union Cabinet Committee on Wednesday approved merger of public sector banks in principle. An Alternative Mechanism will be there to look after the merger proposals from the public sector banks.
“The proposals received from Banks for in-principle approval to formulate schemes of amalgamation shall be placed before the Alternative Mechanism (AM)” said Finance Minister Arun Jaitely.
He said decisions to go for an amalgation should be solely based on comercial considerations.as he added that board of banks have to start the proposal.
After the proposal for amalgamation gets in- principle approval banks will move in accordance with the law and SEBI’s requirements.
At last Central Government will notify the final scheme in consultation with the Reserve Bank of India.
Mr. Jaitely said,”The decision is expected to facilitate the creation of strong and competitive banks in public sector space to meet the credit needs of a growing economy, absorb shocks and have the capacity to raise resources without depending unduly on the state exchequer”.
The successful union of SBI with all its five associate banks and the Bharatiya Mahila Bank in 2016 in record time has encouraged the central government see more such events.
Apart from SBI there are 20 public sector banks operating in India at present. Central government want those to be fewer but stronger.