New consolidation wave? SBI chairman says another PSU bank merger 'may not be a bad idea'

SBI chairman Challa Sreenivasulu Setty told Bloomberg in an interview, "Some further rationalisation might make sense. There are still some smaller, sub-scale banks."

"If another round happens, it may not be a bad idea," Setty.

As per reports, the Indian government is aiming for the second round of merger with the consolidation of several small lenders including Indian Overseas Bank, Central Bank of India and Bank of Maharashtra with big banks like Punjab National Bank, Bank of Baroda and SBI.

Earlier this month, Union Finance Minister Nirmala Sitharaman had revealed that work for the next round of merger was underway.

Speaking at an event of CNBC TV 18, Sitharaman had said, "We will need to sit and talk with the Reserve Bank of India (RBI) and banks on how they want to take it forward, and also discuss with the RBI how they want to build larger banks."

"Work has commenced. We are discussing with the RBI and banks. This is not just about amalgamation. We need an environment where banks can operate and grow," she had added, hinting at an effort that would go much beyond the bank consolidation.

In 2020, 10 public sector banks were merged into four larger entities in the last round of bank consolidation.

The proposal for the new mega merger will be taken up at the cabinet first by officials followed by an examination by the Prime Minister's Office (PMO), CNN News 18 reported.