Chidambaram in favour of bank mergers

Chidambaram in favour of bank mergers

Former Union Finance Minister and Congress leader P Chidambaram. PTI file photo

Former Union Finance Minister and Congress leader P Chidambaram on Saturday said that he is in favour of on-going drive of bank mergers.

“I believe that India should have bigger banks. Our banks are pygmies in front of banks of the world. So it's not a bad idea to consolidate the banks to have to say eight big banks. I support public sector banks, but we must have big bank,” Chidambaram said here on the launch of his book -- Undaunted: Saving the Idea of India.

The current government under the leadership of Prime Minister Narendra Modi has embarked upon the process of merger of various public sector banks.

As part of the merger drive Bengaluru-headquartered Vijaya Bank, Bank of Baroda and Dena Bank are set to form a merged entity by April 1 this year.  The merged entity, with total assets of over Rs14 lakh crore ($190 billion), will be India’s third-largest lender behind the State Bank of India and HDFC Bank.

However, the employees of the Vijaya Bank are up in arms against the merger, as according to them it will club the bank with loss-ridden Bank of Baroda and Dena Bank. They also allege that none of the employees were consulted before taking the decision for the merger.

Prior to this, the government had gone with consolidation nation’s largest lender State Bank of India with five associate banks,

The PSBs off late have been reeling under stress after asset quality review opened a bagful of bad loans in the state-owned banks.