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No PSB merger under consideration currently: FinMin to Lok Sabha

The Finance Ministry also said the IDBI Bank stake sale is currently in the stage of due diligence by the shortlisted bidders.

3 min readUpdated: Dec 2, 2025 10:39 AM IST

The Finance Ministry informed Parliament that there are currently no proposals to merge Public Sector Banks (PSBs). (File)

The Finance Ministry is not considering any consolidation of public sector banks (PSBs) at the moment, the Parliament was told on Monday, amid speculation that more state-owned lenders may be merged together to form larger banks.

“Presently, no proposal on merger or consolidation of Public Sector Banks (PSBs) is under consideration of the Government,” Minister of State for Finance Pankaj Chaudhary said in a written response to a question in the Lok Sabha on the first day of the Winter Session of Parliament.

Reports in recent weeks have said the government is looking to merge the 12 PSBs to create larger banks that can rank among the largest in the world. The 12 PSBs are Bank of Baroda, Bank of India, Bank of Maharashtra, Canara Bank, Central Bank of India, Indian Bank, Indian Overseas Bank, Punjab National Bank, Punjab & Sind Bank, State Bank of India, UCO Bank, and Union Bank of India.

At the two-day ‘PSB Manthan’ organised by the Finance Ministry’s Department of Financial Services in September, the government had discussed ways in which PSBs can become ‘globally competitive’ in the hope that at least 1-2 of them can be in the top-20 of the world by 2047, The Indian Express had reported on September 12. Currently, SBI – at 43rd – is the lone PSB in the world’s top-100 banks in terms of assets.

The last round of bank mergers in the public sector space was announced in 2019, which saw 10 PSBs being amalgamated into four, taking the total number of PSBs to 12.

In response to a separate question, Chaudhary also said there is no proposal at the moment to privatise PSBs in addition to IDBI Bank. Finance Minister Nirmala Sitharaman, in her 2021-22 Union Budget speech, had proposed the privatisation of two PSBs other than IDBI Bank.

Meanwhile, in another question, the Finance Minister said the identity of those who have bid for IDBI Bank “cannot be disclosed before completion of the transaction”.

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“After security clearance from MHA (Ministry of Home Affairs) and fit and proper evaluation by RBI, the transaction is currently in the stage of due diligence by Shortlisted Bidders,” the Finance Minister said in her written answer.

The strategic disinvestment of IDBI Bank was approved by the Cabinet Committee on Economic Affairs in May 2021, with the Central government and Life Insurance Corporation of India putting up 60.72 per cent ownership and management control of the bank up for sale. The Centre is offering 30.48 per cent stake and LIC 30.24 per cent. Post the sale, the Centre will hold 15 per cent in IDBI Bank and LIC 19 per cent.