India needs 5 banks of the size of SBI

Pitching for a consolidation in the banking industry, State Bank of India chairman O P Bhatt said on Tuesday the country needs at least five banks of the size of SBI to service the growing needs of the Indian economy.

"One way of getting size would be consolidation. We need to kick in consolidation as quickly as possible and we should have atleast 3-5 banks as size of State Bank of India," SBI Chairman O P Bhatt told a television channel.

Admitting that Indian banks are not in a position to service the rising demands of the Indian corporates, Bhatt said, "we should have at least one, possibly two banks, which should emerge as global champion for Indian industries."

Indian banks are just about well capitalised but are not capitalised to be able to do justice to the needs of the Indian economy, he said.

"We have to think capitalisation in advance and I think we need to adjust this issue upfront, otherwise it should not happen that because of a lack of capital in the Indian banking sector it add to the drag on the Indian economy," he said.

It is to be noted that SBI has already started the consolidation process with its associates bank. Last year, it merged the State Bank of Saurashtra (SBS) with itself. In June this year, SBI initiated efforts to merge another associate bank, State Bank of Indore.

Currently, SBI have six associate banks namely State Bank of Indore, State Bank of Travancore, State Bank of Patiala, State Bank of Bikaner and Jaipur, State Bank of Mysore and State Bank of Hyderabad.

The merger of all associates with SBI will take the total assets of the combined entity to Rs 8 lakh crore, which will help the lender to become a global financial powerhouse.

Among these, State Bank of Bikaner and Jaipur, State Bank of Mysore and State Bank of Travancore are listed on bourses.