InvestorQ : What is the view on PSU Banks? Does merging of PSU Banks help solve the problem of operating efficiency.
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What is the view on PSU Banks? Does merging of PSU Banks help solve the problem of operating efficiency.

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Khushi Patel answered.
8 months ago


PSU banks have some advantages in the last few years in that most of the NPAs are written off for provided for. Hence downside risk is limited. Secondly, they have got capital infusion from the government and hence they are set to grow. The big question is what happens post the mergers.

Last year, the government announced a series of mega mergers in the PS banking space with the intent of reducing the number of PSU banks to 7-8 across India with a high degree of specialization and regional strengths. Mergers will benefit in a number of ways. It will help them to rationalize costs and also help them to reduce their network of branches and rely more on electronic banking. Above all, now treasury operations can be consolidated and give more bargaining power to these players.