The government is expected to launch the public sector bank consolidation exercise by merging yet another State Bank associate with its parent even as it looks to create eight to ten large state-run lenders through a merger of nationalized banks.
Sources said the issue was discussed at the Gyan Sangam and the message from North Block was clear that it wants to drive consolidation instead of waiting for lenders to move at their own pace. Instead of a bottom-up approach, the strategy is likely to be top-down, with at least a few mergers taking place before the next edition of the annual retreat of public sector bank chiefs. The government has been discussing consolidation for over two decades but has made little progress. Various options have been discussed such as merging smaller and weaker entities with larger players and looking at the geographical spread of a bank to decide the candidate for its merger.