No Proposal for Merger or Disinvestment of Public Sector Banks: Government

New Delhi: The government currently has no proposal under consideration for the merger or disinvestment of public sector banks (PSBs), Minister of State for Finance Pankaj Chaudhary informed the Rajya Sabha on Tuesday.

Responding to a question on whether the Centre plans to merge four PSBs with larger banks or disinvest them by 2026, Chaudhary clarified:
“Presently, no proposal on merger or disinvestment of Public Sector Banks (PSBs) is under consideration of the Government.”

This comes amid media reports suggesting that the government was preparing a PSB consolidation plan that could reduce the number of state-owned banks from 12 to just four by FY27. The proposed roadmap reportedly aimed to strengthen balance sheets, enhance operational efficiency, and create globally competitive banking institutions.

Providing an update on the financial health of PSBs, Chaudhary informed the House that the gross non-performing assets (NPA) ratio has significantly declined—from 9.27% in March 2016 to 2.58% in March 2025, and further to 2.51% in June 2025.

Similarly, the slippage ratio—fresh NPAs as a percentage of standard advances—has dropped from 7.5% in March 2016 to 1.0% in March 2025, and further to 0.9% in June 2025.

He added that recovery of written-off loans is a continuous process, with banks pursuing borrowers through all available recovery mechanisms.

The minister further stated that the Reserve Bank of India (RBI) has instructed lenders to submit monthly lists of wilful defaulters to Credit Information Companies (CICs). These companies are required to publish the data on their websites. Details of wilful defaulters involving amounts of Rs 25 lakh and above are available in the public domain through the CICs regulated by the RBI.

With inputs from IANS