Govt to reduce number of PSBs to 10-15

New Delhi Oct 6: In a bid to reform the banking sector which is overburdened with NPAs problems and to increase the capacity to lend loans the government may soon approve some consolidations of banks.

India will have 10-15 public sector banks with government's majority stake, down from 21 at present, as part of its plan to consolidate banks, Finance Ministry's principal economic advisor Sanjeev Sanyal said on Friday.

He added that "there are something like 21-22 public sector banks.The numbers will be reduced in terms of consolidation, but somewhere to the 10-15 range. We are not going to take it too far down.We need to consolidate some of these large number of banks, but be clear that we are not going to reduce these down to some people think like 4-5 national champions."

Sanjeev Sanyal also said that "we recognize that that will lead to too many too-big-to-fail banks. Currently, we have one large bank State Bank of India...We do not want to create a large number of them. Then, we will have a real problem in terms of concentration of risks".

Finally, experts feel have said that the government must first ensure that the NPA problems is solved so that the consolidation of banks would be easier.