With reference to the governance of public sector banking in India, consider the following statements:
- Capital infusion into public sector banks by the Government of India has steadily increased in the last decade.
- To put the public sector banks in order, the merger of associate banks with the parent State Bank of India has been affected.
Which of the statements given above is/are correct?
[UPSC Civil Services Exam – 2018 Prelims]
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer: (b)
Explanation:
- Capital infusion into public sector banks by the Government of India has not steadily increased in the last decade, there has been a fall in between. Hence, statement 1 is not correct.
- To put the public sector banks in order, the merger of associate banks with the parent State Bank of India has been affected.
- Merging of banks would help in strengthening the bargaining power of the banks, reduce operational expenditure, enhance capital efficiency, streamline banking operations and reduce their NPA burden. Hence, statement 2 is correct.
