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India Cabinet approves plans to merge some state-run banks

[NEW DELHI] India's federal cabinet on Wednesday gave an "in-principle" approval for the consolidation of state-run banks by merging some of the lenders, television channels reported.

Finance Minister Arun Jaitley is due to brief media on the outcome of the cabinet meeting later, a government spokesman said, without giving details.

The Indian government owns majority stakes in 21 lenders, which account for more than two-thirds of banking assets in Asia's third-biggest economy.

But these banks also account for the lion's share of more than US$150 billion in sour assets plaguing the sector. The banks also need billions of dollars in new capital by March 2019 to meet global Basel III banking rules.

sentifi.com

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Speculation has grown in recent months that Prime Minister Narendra Modi's government would push ahead with plans to consolidate the sector, part of broader banking sector reforms aimed at kick-starting credit growth and supporting faster economic expansion.

State-run banks gained on the reports. Bank of India Ltd climbed 2.7 per cent, Punjab National Bank advanced 2.3 per cent while Canara Bank rose 1.9 per cent.

REUTERS

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