Budget may unveil...

INDUSTRY WATCHERS ARGUE that future mergers should be designed to avoid combining banks headquartered in the same region, thereby minimising operational disruption.

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The merger of Oriental Bank of Commerce with Punjab National Bank — both with a strong northern India presence —is often cited as an example of how overlapping geographies intensified integration challenges.Alongside consolidation, officials believe reforms must address capital constraints faced by PSBs. One proposal gaining traction is to raise the foreign direct investment (FDI) limit in PSBs from the current 20% to as muchas 49%, allowing these banks to tap long-term global capital.In contrast, private sector banks are permitted up to 74% foreign ownership.