INDIAN ECONOMY: SBI Returns Give New Energy to Merger Bank

Jakarta -The discourse for the merger of public banks in India again strengthened after President Director of State Bank of India (SBI) Rajnish Kumar gave a presentation at a meeting of bankers in Mumbai, India, recently.

Bankers and government officials stated that Kumar made a detailed presentation of the SBI experience with the merger of five associated banks. During the first few months there were some obstacles, but all went well and the impact started positively.

Kumar’s presentation also includes concerns about the impact of problem loans, integration, and human resource issues. SBI, sees that the merger is one step to enlarge the scale of the bank, but is avoided by banks in India.

Bankers are currently awaiting a clearer strategy from the government on the consolidation of Indian banks.

“SBI does talk about pros and cons, but the government should advise on the steps taken,” said a bank director who attended the meeting in Mumbai, as quoted by Times of India, Monday (18/06/2018).

Although discussions about bank consolidation in India have been going on for almost a decade, there has been no real meaningful step. The reason, the Ministry of Finance of India wants to consolidate the bank goes with a bottoms-up approach, according to the business plan of the bank, without any coercion.

This is not the first time SBI encourages consolidation. Several years ago, the company prepared a blueprint for merging the nationalized banks. However, the proposal failed to be implemented.

Further discussion may appear in a meeting of Finance Minister Piyush Goyal to meet the chief executive of a state-run bank on Tuesday. Recent talks on consolidation are triggered by weak public sector financing, which are burdened with problem loans.

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Written by DI

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