New Delhi: Witnessing the rising importance of banks in the present economic condition and the increasing necessity of bank capital, the government is reworking on its scheme to merge small banks and transform them into large banks.

For this, the government will add some provisions in the proposed amendment of the Banking Bill.

According to sources in the Finance Ministry, a high level committee which was constituted to grant additional funds to the banks, gave approval to merge small banks into big ones.

The government believes that the process to convert small banks into large financial institutions is the need of the hour which will help in handling the grim economic conditions. Also, due to large capital, the big institutions will be able to attract more funds for expansion.

Following this, new provisions will be added while amending the Banking Regulation (Amendment) Bill, 2011 for easing the merger procedure.

Three important bills related to banking sector were introduced in the Parliament recently. A parliamentary committee of the Finance Ministry is going through them.

The Committee’s report is expected to be tabled during the Winter Session of the Parliament.

This is the second time when the Centre is mulling to merge small banks and form large financial institutions. Prior to this, in 2005-06, the then Finance Minister P Chidambaram had tried to plan the same but due to lack of support from the Left, the Centre did not pay heed to it.

JPN/Bureau