Government Says No Bank Mergers Under Consideration; Updates Provided on FDI Limits

The government has clarified in Parliament that it is not examining any proposals to merge or consolidate public sector banks at this time. 

The Ministry of Finance also provided updates on foreign investment rules for banks, and the improved financial performance of Regional Rural Banks. These details were shared in multiple written responses.

No Merger or Consolidation Plan for PSBs

The Minister of State for Finance confirmed that the government is not reviewing any proposal for the merger or consolidation of public sector banks.

The clarification was issued in response to a question in the Lok Sabha.

FDI Limits in the Banking Sector

The minister stated that foreign investment in public sector banks is capped at 20%, while private banks allow up to 74% under existing regulations. 

He noted that foreign investment supports economic development through capital inflows, technology transfer, competition, and job creation.

Improvement in Regional Rural Banks’ Performance

The minister reported that Regional Rural Banks have shown improved financial metrics in recent years. RRBs posted a consolidated net profit of ₹7,571 crore in FY24, followed by ₹6,825 crore in FY25.

He added that although they faced higher costs due to the retrospective pension scheme and computer increment liabilities, key indicators such as CRAR, deposits, advances, NPAs, and credit-deposit ratios have shown consistent improvement.

Read More: Bank of Maharashtra Share Price in Focus; Government to Divest up to 6% Stake Through OFS.

Conclusion

The government’s statements indicate that public sector bank consolidation is not on the agenda at present, while updates on FDI rules and the performance of Regional Rural Banks highlight ongoing policy continuity.

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