Mergers of banks will not be forced by Government

Mergers on individual banks will not be forced, and no time frame has been set for the consolidation process in the banking system, financial services secretary R Gopalan said today. Merger of state-run banks should be done with a view to bring in good synergies, on mutual interests of the concerned entities, and government will not compel the consolidation process on individual banks, he said said at a Bancon conference here.

“We will not force consolidation upon the banks, but will support the merger moves if banks come with proposals…. Amalgamation should be on mutual interest (of both parties),” Gopalan said.

Banks will have to take into account various aspects – economics of scale, optimisation of human resource issues and higher operating efficiencies, while executing the merger moves, Gopalan said.

Noting that banks have the freedom to decide on their acquisitions plans, Gopalan said that the government was willing to look into the merger proposals emerging from individual players and support the consolidation process.

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