Mumbai: During his visit to Mumbai for the 10th anniversary celebrations of the National Stock Exchange (NSE) today, the finance minister P Chidambaram said foreign banks should be allowed to acquire upto 10 per cent stake every year in Indian private banks. This could allow them to acquire control in three-four years, he said.
He said the Reserve Bank of India (RBI) was putting in place guidelines to create a level playing field for Indian and foreign banks. Though the government would facilitate consolidation in the banking sector, it would not force the merger of domestic banks.
He urged Indian banks to opt for mega-mergers, saying they should "think big and act globally." He said that size also matters along with efficiency and each one should become a powerhouse by itself. At least three or four Indian banks should be among the top 100 banks in the world. "I want Indian banks accepted globally on par with international banks by 2010," Chidambaram added.
The minister hinted that there could be mega-mergers in the banking sector. He said that banks have begun talking to one another on mergers and acquisitions, but "the government would not force a merger or alliance but would bless the marriage if it comes through."
There are have been talks about several mergers in the public and private sector banks. public sector banks can also look at private banks if they are suitable candidates, Chidambaram said.
Meanwhile the finance minister said that the government was concerned about inflation and was closely watching the price of commondities. "There are fiscal and monetary steps already in place to control inflation," he said. Inflation was around 7.1 per cent and there was no irrational price hike in commodities, Chidambaram told the press in Mumbai. "We are closely watching the price trends," he added.
During his visit, the finance minister also inaugurated the new corporate officce of Dena Bank at the Bandra-Kurla Complex.