The NDA government’s move to consolidate the public sector banks and bring down the number from 27 to about half a dozen could be shelved, thanks to the demonetisation exercise. Instead, the focus now will shift to financial inclusion.
Sources said that the consolidation process is not expected to see the light of the day before the next Lok Sabha elections slated in 2019.
According to sources, the government was unlikely to carry on “another exercise” which could possibly disrupt the banking system. Bank unions had threatened to go on strikes in case the government carried out the exercise.
The bank board bureau (BBB), under former Comptroller and Auditor General Vinod Rai, was set up to chalk out a plan to move towards having fewer government banks. The roadmap was expected to be ready by end 2017.
However, sources said that it would not be in place anytime soon.
Earlier, the finance ministry said the move would have helped the government in restructuring the functioning of these lenders.
“The consolidation process may have to wait.. the contours have changed suddenly post November 8 and the focus is now on other things such as ensuring bank accounts are opened for people who are still outside the banking net.. another experiment may not augur well at this time,” an official source told HT.
SBI, however, is expected to complete its merger process with its associate banks and Bharatiya Mahila Bank by the next financial year.
“As of now, the exercise is not going to be carried out as there are other pressing issues related to normalising banking activities ...” CH Venkatachalam, general secretary of the All India Bank Employees’ Association said.