Bank Consolidation : Misplaced Priorities

A clear case for consolidation among India's larger public sector banks is yet to be made. These banks have been improving their performance consequent to deregulation, thanks to an enhanced commercial orientation, greater autonomy and injection of market discipline. They need to focus now on human resource development issues, risk management and technological upgradation. A preoccupation with mergers at this stage is not only a distraction, it could derail the steady improvement in performance in the banking system over the past decade.