Finance Ministry Confirms No New Merger Plans for Public Sector Banks

The Finance Ministry has officially clarified that the government is not considering any new mergers or consolidation of Public Sector Banks (PSBs) at the moment. This statement from Minister of State for Finance Pankaj Chaudhary, given in a written reply to Parliament, has put an end to the recent buzz about possible large-scale bank mergers.

Finance Ministry Confirms No New Merger Plans for Public Sector Banks

The Minister clearly stated that no proposal for merging or restructuring PSBs is currently under review. This means the banking system will continue to operate with the existing number of public sector banks. The clarification comes at a time when several reports suggested that the government might reduce the number of PSBs from 12 to 4 in the future.

However, the Ministry confirmed that no such move is being planned right now, and anything discussed so far is only at an early idea stage, with no official approval.

Other Key Points from the Finance Ministry

IDBI Bank Disinvestment is Ongoing: The government’s strategic sale of IDBI Bank is progressing as per earlier cabinet approval. Apart from this, no other PSB disinvestment is planned.

Improved Financial Health of Banks: Public Sector Banks have shown strong progress, with a sharp drop in Non-Performing Assets (NPAs). Regional Rural Banks (RRBs) have also recorded better financial performance.

FDI Limits Remain Unchanged: Foreign Direct Investment in PSBs continues to be capped at 20%, unlike private banks where FDI can go up to 74%.

No Immediate Changes Expected in the Banking Structure

With this official clarification, customers, bank staff, and stakeholders can be assured that no major structural changes are expected in public sector banks anytime soon.
Any future consolidation plans will go through detailed study, multiple approvals, and regulatory reviews before implementation.

Why this clarification is important for the banking sector

This clarification is crucial because it brings stability and clarity to the banking ecosystem at a time when rumors of major mergers were creating uncertainty. Employees, customers, and investors can now operate with confidence, knowing that the government is not planning any sudden structural changes.