The Hindu : Business : Bank mergers to be supported

Online edition of India's National Newspaper
Wednesday, Sep 15, 2004

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Business

Bank mergers to be supported

By Our Staff Reporter

BANGALORE, SEPT. 14. The Centre would rather play a "supportive role" than tell public sector banks what to do, on the issue of consolidation through mergers and acquisitions (M&As), Union Minister of State in the Prime Minister's Office, Prithviraj Chavan, told bankers here on Tuesday.

While the market may again be ripe for M&As, the Centre would in any case ensure that it continued to hold 51 per cent in the public sector banks, for "political reasons," Mr. Chavan said, inaugurating a conference, `Global banking: paradigm shift,' organised by the Federation of Indian Chambers of Commerce and Industry, here. The conference concludes on Thursday.

A policy decision on how exactly the Centre would play a "supportive rather than a prescriptive role" was yet to be taken Mr. Chavan said. "Global banking requires a smaller number of very large banks. This will require M&A activities on a large scale.

While the Government will not force any M&A, we will certainly encourage such activity," he said.

A. K. Purwar, Chairman of State Bank of India said M&As were required to make Indian banks globally competitive.

On Basel II the new international norms arrived at by a group of ten central banks from the developed countries, Mr. Chavan said, each country will have to devise its own plan.

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