The fact that the latest round of mergers was announced on the day when GDP statistics for second-quarter 2019, which pointed to a sharp deceleration of growth to 5 per cent, were released, suggested that the government was treating this as a measure aimed at reviving growth.
While much time has elapsed since the end-August mergers that transformed 10 public sector banks into just 4 bigger ones, the factors that motivated the dramatic move are still unclear. Declaring the move as the final step in a process that began with the merger of the State Bank of India with its subsidiaries and the Mahila Bank and the forced merger of Dena Bank and Vijaya Bank with the Bank of Baroda, the NDA claims it has implemented its objective of reducing the 27 public sector banks that existed in 2017 to just 12.
What was the logic behind the bank consolidation? We discuss more about the mergers in this episode of Money Matters, with expert inputs from CH Venkatachalam (General Secretary, AIBEA), Sushil Khanna (Professor (Retd.) of Economics and Strategic Management, IIM Calcutta), Partha Ray (Professor of Economics, IIM Calcutta).