Smaller public sector banks will be mentored by big brothers for smooth transition before consolidation

The government is going forward with its plan to consolidate two or three public sector banks and turn them into a single entity.

But before this merger plan, the large banks are going to handhold the weaklings for 6-12 months before acquisition.

In a bid to turn public sector banks into profitable lenders, Finance Minister Arun Jaitley had announced a committee to look into the merger of the state-run banks.

The committee discussed various plans towards.

"The expert committee will give its recommendation in six months. Once we have a plan, we may ask the lead bank in some cases to take over as mentors of smaller entities and work out the irritants over a period of another six months or so," a government official told ET.

The bankers also backed the consolidation plans but the finance ministry also said the merger should not lead to creation of another debt-ridden or unprofitable entity.

"Merger in PSBs will involve a lot of external factors including HR issues and unions. A brief period of handholding will help to allay fears and lay preparatory grounds for eventual merger," the above quoted official told ET.

(Image: Indiatimes)