Kumar said: “SBI has already become big. My view is that from a systemic risk point of view, it won’t be advisable that SBI grows through merger or acquisition. Our normal growth and maintaining of market share is a different matter. You can’t have a banking institution, which already has over 20 per cent market share (go for more mergers)… from the risk management perspective also, it’s not good.” In April last year, the Bharatiya Mahila Bank was merged with SBI in line with the decision of the government, the dominant shareholder, to ensure greater banking services outreach to a larger number of women at a faster pace. Earlier, SBI’s associate banks had merged with the parent bank leading to the creation of a local banking behemoth with assets of over Rs 37 lakh crore and over 22,000 branches.
The SBI chief’s comments come against the backdrop of statements by senior government officials, regulators and others on the need for consolidation in India’s banking sector, especially with nearly a dozen state-owned banks placed under the Prompt Corrective Action framework with restrictions on lending, deposit mobilisation and borrowing. In the past, too, many mergers in the banking sector have been forced ones. The SBI is seen as a candidate given its size and strength to take over any troubled banks if its principal shareholder does have its way down the line. Kumar, who took over as SBI chairman last October, said what needs to be deliberated is whether the country needs 21 public sector banks
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