No proposal on merger or consolidation of banks before govt presently: MoS Finance

Updated on 01 Dec 2025 | Category: Business

The government has stated that no proposals for merging or consolidating state-owned banks are currently being considered. Foreign Direct Investment limits for public and private sector banks remain at 20 percent and 74 percent respectively. Disinvestment of IDBI Bank will proceed as approved by the CCEA. Regional Rural Banks have shown improved financial health, posting significant profits.

Synopsis
The government has stated that no proposals for merging or consolidating state-owned banks are currently being considered. Foreign Direct Investment limits for public and private sector banks remain at 20 percent and 74 percent respectively. Disinvestment of IDBI Bank will proceed as approved by the CCEA. Regional Rural Banks have shown improved financial health, posting significant profits.
There is presently no proposal on merger or consolidation of state-owned banks before the government, Parliament was informed on Monday.
"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 reply in the Lok Sabha.
Replying to another question, he said, the Foreign Direct Investment (FDI) limit in PSBs and private sector banks is 20 per cent and 74 per cent, respectively, as per the extant guidelines/ Foreign Exchange Management (Non-Debt Instruments) Rules 2019.
"FDI is considered as a major source of non-debt financial resource for the economic development, leading to long-term sustainable capital in the economy and contributes towards technology transfer, development of strategic sectors, greater innovation, competition and employment creation and supplement domestic capital, technology and skills for accelerated economic growth and development," he said.
In a separate reply, Chaudhary said the disinvestment of IDBI Bank will be carried out as per the CCEA approval.
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The Cabinet Committee on Economic Affairs (CCEA) in its meeting on May 5, 2021, has given 'in principle' approval for the strategic disinvestment along with transfer of management control in IDBI Bank Ltd of such extent of shareholding in Government of India and LIC as may be decided in consultation with LIC and within the framework agreed to by the RBI, he said.
Pursuant to the CCEA's approval in May 2021 for strategic disinvestment along with transfer of management control in IDBI Bank, he said, 60.72 per cent of IDBI Bank's equity is being offered for strategic disinvestment with transfer of management control, wherein the Government of India is offering 30.48 per cent (post sale GOI's residual equity to be 15 per cent) and Life Insurance Corporation of India (LIC) is offering 30.24 per cent equity for disinvestment (post sale LIC's residual equity to be 19 per cent).
In March 2025, he said, IDBI Bank had outstanding capital and liabilities of approximately Rs 4.11 lakh crore, which were backed by total assets (tangible and intangible) of the same amount.
Replying to another question, Choudhary said financial health of Regional Rural Banks (RRBs) has improved in the recent years as they have posted highest ever consolidated net profit of Rs 7,571 crore during FY24, followed by second highest net profit of Rs 6,825 crore during FY25, he said.
This decline was due to the implementation of the pension scheme with retrospective effect from November 1, 1993, and payments towards the computer increment liability, he said.
Also, he said the RRBs have shown consistent improvement in key financial parameters like Capital to Risk Weighted Assets Ratio (CRAR), Deposits, Advances, Non-Performing Assets (NPA), Credit-Deposit Ratio (CD ratio), etc.
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