RBI Governor in favour of merging public sector banks

Reserve Bank of India (RBI) Governor Urjit Patel has voiced his opinion on the merger of public sector banks and said that fewer banks would be good for the banking sector and also help in dealing with the problem of non-performing assets, according to a report on a national news portal.

He said that the consolidation would help banks become more efficient in return for government assistance to deal with the NPA issue. He further said that market share of weaker banks was declining and that of stronger banks was increasing, especially the private sector banks, which in a way was a good thing, reported the news portal.

The RBI Governor further emphasised the role of divestment in public sector banks which would improve the condition of the banking sector.

He said if market valuations are improved through consolidation, then the government would be free to divest part of its stake in the restructured banks and the available funds could be used to deal with the NPA problem, the news portal report stated.