Bank Merger: In 2019, the Finance Ministry merged ten public sector banks to form four banks. Earlier, all seven subsidiary banks and Bank of Baroda and Dena Bank were merged with the State Bank of India. Meanwhile, in the general budget of 2022, Finance Minister Sitharaman had announced the privatization of two public sector banks, but that too has not been done.
Bank Merger: After merging 10 public sector banks into four banks in the year 2019, the government’s silence on banking merger may now be broken. Finance Minister Nirmala Sitharaman did not say anything about this in the General Budget 2024-25. But she had talked about releasing a vision document and strategy for major reforms and changes in the country’s financial sector.
Those familiar with the discussions within the government say that this financial sector strategy will tell the country’s future financial sector expansion, regulation, use of technology, training of banking professionals, as well as how many public sector banks should be there and what should be the size of these banks. It is certain that the government does not intend to completely exit the banking sector right now. This form is likely to be released by the Finance Ministry within the next three to six months.In 2019, the Finance Ministry merged ten public sector banks to form four banks. Earlier, all seven subsidiary banks and Bank of Baroda and Dena Bank were merged with the State Bank of India. Meanwhile, in the general budget of 2022, Finance Minister Sitharaman had announced the privatization of two public sector banks, but that too has not been done.
Only SBI among the top 50 banks in the world
Due to the merger, the number of public sector banks has come down from 27 to 12. Despite this, only State Bank of India (SBI) is ranked 48th among the 50 largest banks in the world. In such a situation, it is believed that the current structure of Indian banks cannot provide the necessary funds as per the need of the goal of becoming a developed India by the year 2047.
Keeping these issues in mind, the Finance Minister had announced to present a vision document for the financial sector. According to officials, the future vision document will be an important step towards making India’s financial sector future-ready.
Vision document will give the roadmap for change
This document will explain how the financial sector can provide loans for development to all industries, startups and small and medium industrial units in the country. It will also provide a roadmap for changes in the current role of the financial sector to make the youth employable.
It will explain what will be the role of public sector financial institutions and private sector financial institutions. It will facilitate foreign investment in the financial sector and will also indicate a clear guideline regarding the use of technology in them. RBI will have an important role in implementing this roadmap.
There will be separate roadmaps for other regulatory agencies like SEBI, IRDA etc. On the basis of this form, the said agencies will take steps for future regulation.
