RBI says bank mergers have to be focused and strategic

The central bank supports mergers among commercial lenders but they have to be focused and strategic, a deputy governor of the Reserve Bank of India said on Monday.

S.S. Mundra, speaking at a business school in Mumbai, warned that merging a weak bank with a strong bank might weaken the stronger lender.

 

"I would believe merger for the sake of merger really would not serve the intended purpose," he said.

India has more than two dozen state-run banks which dominate its banking landscape. The government has said it will not force consolidation, but several weaker banks are expected to merge with rivals.