Club smaller PSBs into a larger bank

..... A plausible escape route could be to redistribute the bulk deposits into smaller accounts—in the past, some banks have done that. Basel III norms, as RBI Governor Subbarao has pointed out, will impose an annual cash set-aside of up to R20,000 crore by the finance ministry to recap all the PSBs. In today’s scenario, this is a huge cheque to write. On the upside, the government can rejig the shareholding of smaller banks at far lower costs for the economy, since they are evidently not doing much of public banking. As some of them are nicely capitalised, merging them with the more stressed large banks can save some of the humongous payout.....

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