Finance Minister P. Chidambaram has identified seven public sector banks having assets of over Rs 50,000 crore, as the ones to take the lead in the consolidation process in the banking industry while addressing banking and media personnel at Bank of India’s centennary celebrations in Mumbai on Saturday.These include State Bank of India, Punjab National Bank, Canara Bank, Bank of India, Bank of Baroda, Union Bank of India and Central Bank of India. Categorising these banks as Group ’A’ banks, Chidambaram said: “These seven banks will take the lead in the consolidation process. They may look at consolidation opportunities amongst themselves or with other smaller public sector banks or with other private banks.” “If the boards of these banks forward a merger proposal, and have the support of their staff, the Government of India will encourage such a proposal,” said Chidambaram.Highlighting the need for having a few large banks, he said a country having a population of over 102 crore could not be content with just one large bank (read SBI). “Instead, we can build four or five giant banks which can challenge the best and the biggest banks in the world.” Chidambaram later said the Centre and RBI would take steps to moderate the effect of crude oil price increase on inflation. “Oil prices would have some adverse impact on inflation, but we will take measures to moderate the the impact.” He also said that while the oil price hike would impart some inflationary pressure, it would not hurt growth.
