No roadmap for merger of public sector banks: Sitharaman

New Delhi: Finance Minister Nirmala Sitharaman on Monday said that the government does not have any roadmap for mergers of public sector banks.

However, a High-Level Committee on Banking for Viksit Bharat, proposed in the Budget 2026-27, will look into the topic and other aspects, she said.

"I am not familiar with any roadmap...there isn't one," Sitharaman said in a media briefing after her post-Budget customary address to the Board of the Reserve Bank of India.

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"Bank consolidation was not a subject here, nor was it a subject before the Budget, but the Committee, which is now being appointed, once the terms of reference are given, they will look into every aspect of how to strengthen Indian banking," she said.

In the Budget, Sitharaman proposed setting up a 'High Level Committee on Banking for Viksit Bharat' to comprehensively review India's banking sector and align it with the country's growth goals while safeguarding financial stability, inclusion, and consumer protection.

The High-Level Committee on Banking for Viksit Bharat is expected to draw up a blueprint to create mega-lenders capable of meeting the financing needs of a developed India.

"I propose setting up a 'High Level Committee on Banking for Viksit Bharat' to comprehensively review the sector and align it with India's next phase of growth, while safeguarding financial stability, inclusion and consumer protection," she had said in the Budget speech on February 1.

To achieve scale and improve efficiency in the public sector NBFCs, as a first step, the Budget also proposed to restructure the Power Finance Corporation (PFC) and Rural Electrification Corporation (REC).

REC is a subsidiary of state-owned power sector lender Power Finance Corporation (PFC). Both entities play a key role in funding power generation, transmission and distribution projects.

In March 2019, PFC completed the acquisition of a majority stake in REC Ltd by transferring Rs 14,500 crore to the government.

PFC acquired 103.94 crore shares, constituting 52.63 per cent stake, held by the government in REC, along with the management control. The acquisition price was worked out to Rs 139.50 per share. This stake acquisition came following the in-principle approval from the Cabinet Committee on Economic Affairs.

Commenting on the banking sector, RBI Governor Sanjay Malhotra said banks are adequately capitalised and can sustain credit growth for the next 4-5 years, which will further support the economic needs.

He said the deposit growth rate is now keeping pace with the increase in credit growth.

On the issue of moderation in net FDI, Malhotra said gross FDI has been increasing.

Last year, he said, "It increased by about 14-15 per cent. Even this year, gross FDI has increased, and the growth rate is also high. It's because of repatriations of those people who had done earlier FDI. It has gone out. The net (FDI) has decreased".

Similarly, he said, now they (Indians) are feeling stronger and bolder because of the various measures taken domestically to strengthen our economy. They are going and investing more abroad, and because of that, the net FDI is not as high as we would like.

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