PSU Banks may merge but is this a time to panic ?

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Suddenly 5 photos of TV channel become viral which shows merging of few banks into one. Yes, the images are not photoshopped or modified but are not new. The photos are from July 2017, taken from Zee Business Hindi Channel

Following are the viral images –

These news actually resulted in a panic with a Hoax, a list of banks closing down which was false. You can read about it on Money Control

“There are increasing number of messages on WhatsApp and other social media platforms informing people about closure of nine banks. However, these are baseless, untrue and all depositors’ money is safe, according to Finance Ministry and the Reserve Bank of India (RBI).

Since last few weeks, Whatsapp Groups have seen a barrage of messages claiming closure of nine public sector banks — Corporation BankUCO BankIDBI BankBank of MaharashtraAndhra BankIndian Overseas BankCentral Bank of IndiaDena Bank, and United Bank of India.

The Finance Ministry has confirmed that the reports of the PSBs shutting down are “ridiculous, baseless and incorrect”.

At present, these banks are weak with respect to their increased bad loans and low capital buffer because of which they are put under prompt corrective action (PCA) by the banking regulator RBI.”
About Bank Merger, Economic Times says –
“Government plans to consolidate 21 public sector banks to 12

Updated: Jul 17, 2017, 11.42 AM IST

“NEW DELHI: The government is working on a consolidation agenda in a bid to create 3-4 global-sized banks and reduce the number of state-owned lenders to about 12, an official said. The 21 public sector banks would get consolidated to 10-12 in the medium term, the official said.

As part of a three-tier structure, the official said, there would be at least 3-4 banks of the size of SBI, the country’s largest lender. Some region centric banks like Punjab and Sind BankBSE 1.81 % and

and Andhra BankBSE 0.25 % will continue as independent entities, while some mid-size lenders would also coexist, the official added. Last month, finance minister Arun Jaitley had said the government is “actively working” towards consolidation of public sector banks but declined to provide details, saying this was a price-sensitive information.

Enthused by the success of SBI merger, the finance ministry is considering clearing another such proposal by this fiscal if the bad-loan situation comes under control. According to former RBI governor C Rangarajan, the system will have some large, small and local banks, and so forth. “What is needed in the system is variety ,” Rangarajan said. “
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