Is there any proposal for merger or disinvestment of public sector banks?
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Synopsis
In a recent statement, the government confirmed that no proposals exist regarding the merger or disinvestment of public sector banks. This response comes amidst speculation about potential bank consolidation by 2026. With a significant drop in non-performing assets, the banking sector shows signs of recovery, but the future of PSBs remains uncertain.
Key Takeaways
- No merger or disinvestment of public sector banks is currently planned.
- The gross NPA ratio has significantly decreased.
- Recovery of written-off loans is an ongoing process.
- The RBI mandates monthly reporting of willful defaulters.
- Future consolidation plans are speculative.
New Delhi, Dec 2 (NationPress) The government has currently no plans regarding the merger or disinvestment of public sector banks (PSBs), as stated in Parliament on Tuesday.
In response to an inquiry in the Rajya Sabha about potential disinvestment of four PSBs or merging them with larger banks by 2026, Minister of State for Finance, Pankaj Chaudhary, clarified: "At this time, there is no proposal under consideration for the merger or disinvestment of Public Sector Banks (PSBs)."
Previous reports suggested that the government was drafting a PSB consolidation strategy aimed at reducing the number of state-owned banks from 12 to four by FY27. This plan was intended to enhance balance sheets, boost operational efficiency, and develop banks that can compete on a global scale.
Chaudhary also revealed that the gross non-performing assets (NPAs) ratio in PSBs has seen a decline from 9.27% in March 2016 to 2.58% in March 2025, with a further reduction to 2.51% in June.
The slippage ratio, which represents the new NPAs as a percentage of standard advances, also fell from 7.5% in March 2016 to 1.0% in March 2025, and further to 0.9% in June 2025.
Additionally, the recovery of written-off loans is an ongoing endeavor, as banks actively pursue recovery actions against borrowers using various available mechanisms.
The minister added that the RBI has instructed banks to provide the list of willful defaulters to all Credit Information Companies (CICs) monthly, which are then required to publicly display this information on their websites. The details of willful defaulters with debts of ₹25 lakh and above are accessible in the public domain through the websites of credit information companies regulated by the RBI.
Point of View
It is crucial to remain unbiased in our reporting. The government's decision not to pursue mergers or disinvestment of public sector banks reflects a commitment to stability in the banking sector. While recovery indicators are promising, ongoing scrutiny and stakeholder engagement remain vital for ensuring the efficacy of these institutions.
NationPress
02/12/2025
Frequently Asked Questions
Are there any plans for the merger of public sector banks?
No, the government has confirmed that there are currently no plans for the merger of public sector banks.
What is the current status of non-performing assets in PSBs?
The gross non-performing assets ratio has declined significantly, from 9.27% in March 2016 to 2.51% in June 2025.
