NEW DELHI: The government has asked small state-run lenders to look at a differentiated approach in banking to leverage capital, focusing on a niche instead of copying big banks.
In the next two months as such, boards of nearly 12 such small public sector lenders are expected to share with the government their plans on finding new focus.
“Differentiated banking is the need of the hour, mostly for smaller lenders. They have to find their niche and ensure that they push credit growth in these sectors,” said a finance ministry official.
“You cannot have 8-10 lenders aping those big banks and being happy by just being a part of consortium lending. If they’re not able to develop a niche segment, they should fold into another bank,” the official said.
“Esse
These talks were part of the ‘PSB Manthan’ – the conclave of state-run banks – where PSBs were told that the Rs 2.11lakh crore recapitalisation the government has announced would depend on the reforms they undertake to clean up their books and increase lending to medium and small enterprises.