(FE)
Keen to push consolidation in the public sector banking space, the government is looking to set up a new mechanism to speed up decisions on possible mergers among state-run lenders. The new process will be along the lines of the alternative mechanism that’s been adopted for strategic disinvestments, which involves a small group of cabinet ministers.
“We are discussing various combinations for merger in public sector banks. The basic premise remains the same, same, that is to put the process on a fast track,” said a government official aware of the deliberations, adding that this option may also be explored for the IDBI Bank stake sale.
The government announced its intention of reducing its stake in IDBI Bank to below 51 per cent last year but this hasn’t taken place yet on account of the lender’s bad loans and as the valuation exercise hadn’t included its real estate assets. The government has already announced itsintent to press for consolidation in the banking sector. Finance minister Arun Jaitley said in June that the government was “actively working” toward consolidation but did not share any details, stating this was price-sensitive information.
