Bangalore: Notwithstanding the government`s intention of bringing about consolidation in the PSU banking space, Punjab National Bank chairman KR Kamath said on Saturday that it`s going to be a long-drawn process.
Unlike the past, when mergers were a kind of "bailout" and "distress marriage" to protect the interest of depositors, the one being talked about now is "arranged marriage" where suitors can take their time, he said here.
The government had earlier this week kicked off a discussion process towards consolidation in the PSU banking space at a meeting with the chiefs of five large PSU banks, including PNB.
"Consolidation has been in talks since the past three years. It`s being talked about today also," Kamath said, adding, "but it`s not happening tomorrow or next month. It`s a long way. It`s in a very, very nascent stage."
He pointed out that "there are things to be put in place" in terms of requirements, including amendments.
The PNB chairman also opined that mergers and acquisitions going forward would be a kind of "arranged marriage", and not "distressed" or "bailout" ones, forced to protect depositors` interests, as witnessed earlier.
Kamath likened today`s situation to a groom (a bank) looking at a prospective bride (another bank) who he can have a "date" with, and tying the nuptial knot (merger or acquisition) only if they can get along and can "live happily" together, in terms of "technology and so many other things".
He said consolidation in the banking sector is being discussed in the background of the Narasimhan committee report.
"Now the question is what`s the size of banks in India, compared to the banks abroad. This is the issue which is being discussed", he said.
Kamath saw value in inorganic growth, which he said allows banks to build scale more rapidly than the organic route, cutting the "gestation period" as it takes around three years for any new bank branch to "mature".
He refused to talk about PNB`s preference on bank that it wants to take over, but hinted that it could be one that has a strong presence in the western or southern parts of India or in both regions.
"I (PNB) am very strong in north and to some extent in the East. So, below that (west and south where it needs to consolidate)", Kamath said.
"I will look at all Indian banks to find out who matches me best in all areas", he added.