Supervisor Elham AbolFateh
Editor in Chief Mohamed Wadie

India Merges 10 State Banks to Revive Economy


Fri 30 Aug 2019 | 11:11 PM
Taarek Refaat

In a move to revive slow economic growth, India announced the merger of 10 state-run banks into four institutions.

India's Finance Minister Nirmala Sitharaman said in a press conference on Friday that 12 banks would now operate strongly in a unified, active manner beside the availability of sufficient capital.

The merger in the Indian banking sector was the first since Prime Minister Narendra Modi was re-elected, bringing the number of state-owned banks down from 27 in 2017 to 12.

[caption id="attachment_75214" align="aligncenter" width="741"] Nirmala Sitharaman during a Press conference on Friday[/caption]

The announcement comes after India released economic data for the second quarter of this year, which showed a slowing GDP at 5%, the lowest level in six years.

Sitharaman added that Oriental Bank and United Bank would merge with National Bank of Punjab, creating India's second-largest lender after the National Bank of India.

In 2017, the Indian government merged three public banks, including Bank of Baroda, Vijaya Bank, and Dena Bank.

The Finance Minister said that banks will play an essential role in transforming India into a $5 trillion economy. "Economic growth requires monetary easing, liquidity and higher lending capacity as well as the adoption to modern technology," she said, adding that merger is one way to boost banking services and activities.

"Following the merger, the larger banks will focus on international markets, the middle ones on the national market, while the smaller banks will contain the regional markets," she concluded.