| (From left) Union finance minister P. Chidambaram, Maharashtra chief minister Vilasrao Deshmukh and Bank of India CMD M. Balachandran in Mumbai on Saturday. (PTI)
Mumbai, Sept. 10: Union finance minister P. Chidambaram has asked the top seven public sector banks to lead the consolidation process, thereby creating four to five giant entities in the country that can challenge their global counterparts.
The seven banks, which have assets of over Rs 50,000 crore, are the State Bank of India, Bank of India (BoI), Punjab National Bank, Canara Bank, Bank of Baroda, Union Bank of India and Central Bank of India. Chidambaram said the banks could consider consolidation among themselves or with smaller nationalised counterparts. They can also weigh the options of private banks.
The government would not be averse to any such consolidation proposals presented by the bank boards, Chidambaram reiterated at the centenary celebrations of BoI here today. However, such plans should have prior consent of the employees, he added.
Interestingly, BoI itself was reportedly in talks with UBI for a merger. Though the merger has not yet come through, the finance minister, while responding to a query on the proposal between the two banks, said the government would welcome such plans if they are driven by the board and have staff consent.
“I sincerely wish that BoI will take the lead in bank consolidation,” Chidambaram said.
Apart from taking on the biggest banks in the world, a consolidated entity would provide large resources to projects such as the Mumbai urban renewal plan, which will require thousands of crores of rupees, the finance minister added.
“This country requires several giant banks,” he said.
Chidambaram wants banks to assure the staff and customers that a consolidation will not make the bank impersonal, distant and less friendly.
BoI chairman and managing director M. Balachandran said the bank has redrawn its organisational structure to make it more customer-friendly and business-driven. BoI is also expanding its overseas reach, he added.
Chidambaram said the government was taking steps to keep the inflation level moderate in view of increasing crude prices, even as he asserted that economic growth would not be affected.
“We recognise that the oil price hike will put some inflationary pressures. So we will take some counter- measures,” Chidambaram said on the sidelines of the centenary celebrations of BoI.
“The RBI and the government will take the necessary steps to keep inflation moderate,” he added.
The finance minister also said the surge in crude prices would not affect growth. A demand for oil is an indicator of growth impulses of the economy, he added.
BoI Bengal business
BoI expects a business growth of 30 per cent in Bengal in the current fiscal.
The bank hopes to achieve a 33 per cent growth in credit from last year’s Rs 2,705.12 crore and 27 per cent growth in deposit from last year’s Rs 5,002.44 crore. The bank has saturated 51 villages in the north and south 24 Parganas and Nadia by issuing Kishan Credit cards.
Also, the bank has adopted six villages in the state for overall economic development of their inhabitants. These six villages are in the districts of north 24 Parganas, Nadia, Malda, Murshidabad, Hooghly and Howrah.