RBI governor Urjit Patel suggests the merging of public sector banks with other sectors which are declining now, that would be helpful for both. This merging will helps to deal with problem of non-performing assets (NPA).

Do we need so many public sector banks, while delivering the Kotak Family Distinguished Lecture at Columbia University on Monday?  It is better to consolidate them into fewer banks, he said.

Among the small banks some of banks can be merged in return for government assistance for look at of the NPA problem and this would also make them more efficient, he said.

“The weaker banks are losing market share that is a good thing,” Patel said. The stronger banks are becoming stronger and gaining more market share, particularly the private banking sector.” “Lenders who are stronger are gaining more market share,” he added.

The merger of banks would lead to saving through the action of bank branches and operations, he said.

Divestment measures would improve overall banking sector health, he said adding that good, digital savvy personnel can be hired to further expand digital banking operations.

Increased market value would create good time for the government   to divest some of the ownership in restructured banks and this would help to reduce the amount of overall that the government needs to inject into deal with NPA issue, he added.