‘SBI not the right candidate to take over more banks’
State Bank of India (SBI) is the largest bank with a market share of 23% and more consolidation will lead to monopoly in the Indian banking sector, says chairman Rajnish Kumar
New Delhi: The country’s largest lender State Bank of India today said it is not in a position to acquire more banks at the moment as it needs 2-3 years to see gains from the consolidation effected last year. State Bank of India (SBI) had last year merged with itself five of its subsidiary banks and took over Bharatiya Mahila Bank, making it one of the largest banks globally.
“We are not the right candidate to take over more banks, as we will need two to three years to see gains from consolidation of its associate banks last year,” SBI chairman Rajnish Kumar told reporters in New Delhi. SBI is the largest bank with a market share of 23% and more consolidation will lead to monopoly in the Indian banking sector, he added.
According to Kumar, India needs to reduce the number of state-owned banks through consolidation for better management.
Kumar’s comment comes days after the government announced its intention to merge Bank of Baroda, Vijaya Bank and Dena Bank. On Monday, ‘Alternative Mechanism’ (AM) headed by union finance minister Arun Jaitley decided to merge three banks with a view to create global-sized lender, which will be stronger and sustainable.
The merged entity will have a combined business of ₹ 14.82 trillion, making it the third largest bank after SBI and ICICI Bank Ltd. Its net NPA ratio will be at 5.71%, significantly better than public sector bank average of 12.13%.
Responding to a question related to stressed assets in the power sector, SBI chairman Kumar said that efforts were on with respect to resolution of all the cases. “Lenders are convinced about IBC process. There is no effort to consciously avoid IBC (insolvency and bankruptcy code),” he said.
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