Mid- size banks asked to contemplate M&As
By Ankit Sharma
Oct 5, 2009
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At an event organized by Vijaya bank to launch its mobile banking facility, Finance secretary, Ashok Chawla, said on that Indian mid- sized banks should consider mergers and acquisitions in order to adapt themselves in the rapidly changing economic scenario.

Chawla said "In the next five to 10 years, mid-size banks should look at merger and consolidation so that the structure of the banking system is changed to suit the growing needs of the economy."

Emphasizing the importance of big size, the minister added that India needed banks with bigger balance sheets. He said that to support growth of economy at 9-10 per cent size was vital, since it would not only help in meeting domestic transactions but also international transactions.

State bank of India (SBI), country's largest public sector bank had merged with its subsidiary, State Bank of Saurashtra in August 2008. SBI is also looking to merge another subsidiary, State Bank of Indore, with itself. With this the number of associates of SBI would come down to five. Chawla welcomed SBI's move but said that other banks also needed to consolidate in order to grow.

The finance secretary further added that greater size was required to lower the cost of funds. He said "Mid-size banks should find ways and means to work together and seriously need to take a look at consolidation."

Earlier, O P Bhatt , chairman of SBI had also stressed on consolidation of banks. "We should have at least 3-5 banks as size of State Bank of India," he had said.


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