Do banks in India need to consolidate?
There are conflicting signals form the Government and the RBI. While Govt wants mammoth banks to finance large value projects in infrastructure and also the fact that none of the Indian banks figure in top 100 world 's largest banks, the RBI seems to disagree. The other day when the question of bank's consolidation was raised to one of the DG of RBI, he reportedly said, the first thing the banks should achieve is the financial inclusion. He desired that the banks should make available its facilities to all. He also said that in a few years from now, every village with population of 2000 or more people will have the banking services.
I rather think that both can co exist. In other words, there could be mammoth banks to lend large projects in infrastructure, there is a room for small banks also as is the case in the US. Please do not mistake me for mentioning US as the country learns from experience and bounces back. I also recall the speech by Dr Rangarajan emphatically saying that both large and small banks can co exist and still be profitable by identifying their core areas of strength.
I rather think that both can co exist. In other words, there could be mammoth banks to lend large projects in infrastructure, there is a room for small banks also as is the case in the US. Please do not mistake me for mentioning US as the country learns from experience and bounces back. I also recall the speech by Dr Rangarajan emphatically saying that both large and small banks can co exist and still be profitable by identifying their core areas of strength.
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