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Informist, Wednesday, Oct. 29, 2025

 

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--Banking secy: There is case for further consolidation of PSU banks 
--Banking secy: Banks need to invest in cybersecurity 
--Banking secy: Want banks to prioritise resolution of public grievances 
--Banking secy:Current stability in banking sector must not cause complacency 
--Banking secy: Banks should lend more to MSME, agri sector 
--CONTEXT: Banking secy Nagaraju's comments at Business Standard event 
--Banking secy: Dont see much impact on banking sector from global issues
 

MUMBAI – The government is looking at various scenarios for the next round of consolidation of public sector banks, Department of Financial Services Secretary M. Nagaraju said Wednesday. "Is there a case for further consolidation? Possibly, yes. Government always keeps thinking...government keeps getting large number of ideas from large number of sources," Nagaraju said at the Business Standard BFSI event here.

 

He said the government will take a final call on the candidates only after ensuring that the move will bring better synergy. "There are a large number of combinations, permutations for this exercise. Government always looks at the most important parts of the consolidation. Whether it will lead to the benefits of synergy?," he said.

 

In May 2024, Informist had reported that the government may rethink the plan to privatise two public sector banks, and may look at merging certain state-owned banks. In the Budget for 2021-22 (Apr-Mar), Finance Minister Nirmala Sitharaman had announced plans to privatise two public sector banks. However, the inordinate delay encountered in selling its stake in IDBI Bank may have prompted the government to reconsider the proposal to privatise other state-owned lenders.

 

The Narendra Modi government had in August 2019 announced a mega merger plan for 10 public sector banks. Effective Apr 1, 2020, Oriental Bank of Commerce and United Bank of India were merged into Punjab National Bank, while Andhra Bank and Corporation Bank were merged into Union Bank of India. Syndicate Bank was merged with Canara Bank and Allahabad Bank was merged into Indian Bank.

 

Prior to this, five associate banks of State Bank of India--State Bank of Bikaner and Jaipur, State Bank of Mysore, State Bank of Travancore, State Bank of Hyderabad and State Bank of Patiala--along with Bharatiya Mahila Bank were merged with State Bank of India in 2017.

 

Nagaraju said the state-owned banks have been reporting strongest ever financial performance over the last few years. "They are no longer conservative...they are experimenting, innovating, and taking risks. Internationally, there are a lot of problems. Despite these uncertainties we are doing very well," he said.

 

Nagaraju does not expect much negative impact on the domestic financial sector due to external volatility. "We are stable, we are consistent. Because we have a consistent policy approach and direction," he said.

 

He, however, cautioned that the current stability in banking sector must not lead to complacency. Cybersecurity is another area of concern for the banking sector and banks must allocate resources to bolster their defences against possible threats, Nagaraju said. The government also wants PSU banks to focus on addressing customer grievances expeditiously, he said. 

 

Lending to micro, small & medium enterprises and farm sector also needs to improve, the banking secretary said. "MSME growth is good, but we need to do more," he said.  End

 

Reported by Sagar Sen, Krity Ambey and Kabir Sharma

Edited by Vandana Hingorani

 

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