BANGALORE: The time is not far when the foreign banks will spread their business in India gradually, which in turn will create intense competition for Indian banks. In order to face such competition the Indian banks need to undergo mergers. Moreover, it is seem that with the increasing number of large public sector banks many small banks are not able to grow as expected.  Also with new private banks blooming up with and Reserve Bank of India issuing more licenses the small banks will find it very difficult to survive, hence merger of banks seems to be a great option to all the officers of banking sectors reports Business Standard. 

Public sector bank consolidation was a hot topic in 2008-09. The banking industry in India has been in the process of transformation and consolidation ever since 1961. Now the government is again back with the proposal of consolidation of state owned banks and this time they want the finance ministry to look forward it after checking the feasibility of the proposal. The new finance minister Arun Jaitley is expected to give a comment on proposal shortly in coming budget.

The proposal regarding the consolidation has been discussed by the finance ministry with some of the larger and small banks. Larger banks seem interested in merging but at the same time the few small banks have shown a disinterest on the same. Apart from the large and small banks there are few commercial banks that have not only shown interest in consolidation but also given their presentations on how the government can go about it. "There has been some discussion, but the ministry wants to tread cautiously because of complex issues such as what will happen to the shareholding pattern and employees after the merger of two banks," said a finance ministry official who did not wish to be identified.