Last week, the Government announced the consolidation of 27 Government banks into 12 in order to strengthen the banking sector, struggling under a mountain of debt as well as to ensure robust balance sheets that can lead to credit growth in the economy. In August 2019, the Finance Minister had also announced that the centre will front-load its Rs.70,000 crore capital infusion into public sector…
In a paper published in April 2019, researchers at the Reserve Bank of India (RBI) found that more of Indian banking sector consolidation in the country’s struggling banking sector will help lenders lower costs and efficiently scale their operations. The same paper finds that India had 19 cost-efficient banks in 2005, falling to a low of 12 before recovering to 14 by the end of 2018. While banking…