The total assets of all public sector banks in India stood at Rs 3,766,716 crore as on March 31, 2009, with the top five banks accounting for close to 50 per cent of the total assets at Rs 1,883,904.98 crore. A giant consolidation among all public sector banks would create an entity that would be the 30th largest bank globally, in terms of assets. In terms of branches it would be the single largest bank across the globe with close to 57,000 branches. The employee strength would stand at a whopping 7.5 lakh.

Could a banking behemoth come out if these vast financial entities were merged? Obviously, it is not going to be easy. It was at least 15 years ago that a public sector bank merged with another government-owned bank. That was in 1993 when New Bank of India (NBI) merged with Punjab National Bank, borne out of a compulsion: NBI was sinking and had to be bailed out.

P Chida-mbaram as union finance minister had fancied the idea of merging top line government banks to evolve a world class bank in terms of business clout, reach and resources to reflect the image of an emerging economic power on world stage.

Since then, nothing has moved, notwithstanding recommendations by several expert committees, which favoured consolidation amo-

ng government-owned ban-

ks to bring about more efficient entities. Far from mergers, a new PSU bank, IDBI, has been added to the line-up taking the grand total of PSU banks to 20.

KR Kamath, chairman and managing director, Punjab National Bank, says “till now, whatever consolidation happened, it has been forced. This time it is like an arrang-

ed marriage and arranged marriages always take a bit of time.”

Allen Pereira, chairman and managing director, Bank of Maharashtra says “consolidation among PSU banks would lead to many benefits for the merged entity. The new and larger entity would be able to raise capital at a lower cost that may result in more a competitive interest rate regime. It would also result in lower costs as banks may avoid duplication of branches on the same street.”

But going by the word doing the rounds in banking circles, there appears to be growing acceptance for banks tying the knot, metaphorically speaking.