Public sector bank consolidation green-lit by Union Cabinet

As per media reports, the Union Cabinet has given in-principle approval for a merger of public sector banks. The Cabinet has set up a ministerial panel to supervise the merger process, the reports added. The objective is to consolidate the 21 state-owned banks in the country that form around 75% of the country’s banking system. 
 
After the consolidation, public sector banks are likely to face a rise in bad loan ratios and would have to rearrange their branch networks. The country’s largest lender, State Bank of India, had a successful merger with five of its associate banks and Bharatiya Mahila Bank. The merger, announced last year, became effective on April 1 and did not see much opposition from the employee unions.
 
Meanwhile, normal banking operations were hit hard on Tuesday as public sector bank employees went on a nationwide strike to protest against the government’s proposed move of consolidation of PSU banks and their privatisation.