Bank mergers based on biz need: Centre

Unlike in the past when most of the mergers took place under the Banking Regulation Act to bailout weak banks — especially in the private sector — amalgamations should be based on pure business sense and at the initiative of the banks, said Financial Services Secretary RGopalan at the second and concluding session of Bancon 2009-10 summit here.

At best, Gopalan continued, the government would “act as a patriarch and bless public sector bank mergers that are based on synergy.”  His view on consolidation of PSU banks at the summit assumed importance considering that it was his first public statement since taking charge 10 days ago.

Further, he said banks should look at the cohesiveness in culture, the technology and the economies of scale as well as the operational benefits that would accrue due to a merger. “The government will not force consolidation but will provide the right kind of support. We will be patriarchs and bless marriages and see how it works.”