FM tells banks to look at mergers

Finance Minister P Chidambaram said the government will favourably consider proposals to merge strong banks with each other to face competit...

Finance Minister P Chidambaram said the government will favourably consider proposals to merge strong banks with each other to face competition.

He asked the public sector banks to come out with more mergers and acquisitions proposals amongst themselves. Unlike earlier when weak banks were merged with strong banks, Chidambaram said if two strong public sector banks want to merge then he will encourage it.

“Consolidation is the name of the game in oil and telecom sectors and I am glad that banking sector is also looking this (consolidation) as a strategy,’’ he said addressing Indian Banks Association’s AGM. The government would look at bank proposals put forward for amalgamation favourably as consolidation would give strength and scale to act like global bank, he said.

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IBA Chairman V Leeladhar said consolidation was necessary as competition and profitability would put pressure on banks to reach a critical size of mass to succeed in business. The pressure of capital would tend to surround the management which in turn requires enough clout to access markets, he said.

Bank mergers would be a rule rather than exception in times to come. There are synergies to be leveraged through consolidation where size, spread, resources and capital could be reconciled, the IBA Chairman said.

Chidambaram for ‘patience’ on inflation

		MUMBAI: Asking the nation to be patient on soaring inflation rates, Finance Minister P Chidambaram said there are 3-4 factors for the rise in inflation which is excess liquidity and shock of oil prices. “We’ve no control over oil prices. We have taken steps and hopefully the performance of various sectors will reduce inflation in the coming weeks,’’ he said. —ENS