This refers to reports that the Reserve Bank of India is giving liberty to banks for mergers, shifting and closure of their branches in urban areas without seeking RBI permission. This step is in the right direction, especially when some branches of the public sector banks are too close to each other with insignificant business transactions.
It is time that the Union Government should not only merge all subsidiaries of the State bank of India in one go, but even merge comparatively smaller public sector banks in major nationalised banks by ensuring that the public sector banks have some upper maximum limit. Reducing the number of banks will largely reduce the need of clearing operations where funds can be transferred by bank transfers rather than clearing.
A bulk of the banking business is in the urban areas, with many branches of various public sector banks having negligible business because there are too many branches in the vicinity. Reducing overheads by merger of public sector banks will increase their profitability and, thereby, contribute more for national resources.