MANU/PIBU/1077/2017
Department/Board : Press Information Bureau
Date : 23.08.2017
Cabinet gives in-principle approval for Public Sector Banks to amalgamate through an Alternative Mechanism
The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has given in-principle approval for Public Sector Banks to amalgamate through an Alternative Mechanism (AM). The decision would facilitate consolidation among the Nationalised Banks to create strong and competitive banks.
Salient features:
The salient features of the approval Framework for Consolidation of Public Sector Banks are as follows:
-
The decision regarding creating strong and competitive banks would be solely based on commercial considerations.
-
The proposal must start from the Boards of Banks.
-
The proposals received from Banks for in-principle approval to formulate schemes of amalgamation shall be placed before the Alternative Mechanism (AM).
-
After in-principle approval, the Banks will take steps in accordance with law and SEBI's requirements.
-
The final scheme will be notified by Central Government in consultation with the Reserve Bank of India.
Background:
In 1991, it was suggested that India should have fewer but stronger Public Sector Banks. However, it was only in May 2016 that effective action to consolidate public sector banks began to be taken by announcing amalgamation of six banks into the State bank of India. The merger was completed in record time, unlike earlier mergers of State Banks of Indore and
Saurashtra.
SBI is now a single bank with about 24000 branches, over 59000 ATMs, 6 lakh POS machines and over 50,000 business correspondents, which serve all parts of the country, including far flung areas. Indeed 70% of SBI's network lies in rural and semi urban areas. In that sense, the bank serves to unite India through a uniform banking culture. It also has a significant international presence, and is one of the largest global banks. Its size, financial strength and outreach have made it possible for customers to access a worldwide network of branches across all time zones, as well as to a........