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Report: India asks state-owned banks to shut loss-making branches

India's finance ministry asked state-owned banks to shut loss-making domestic and overseas branches to strengthen their financials and improve overall efficiency, Press Trust of India reported Dec. 25, citing people with knowledge of the matter.

The ministry advised the banks to consider consolidating their overseas subsidiaries into a single subsidiary with five to six banks coming together. The ministry believes that a single subsidiary formed from consolidation of five or six banks is more efficient than multiple banks having separate branches in a single country. The ministry also asked the banks to take a final closing call on their nonviable overseas operations.

Several of the banks, including Punjab National Bank and State Bank of India, have already taken such initiatives. Punjab National Bank in November announced plans to offload stakes in three units, while State Bank of India merged with five subsidiaries and Bharatiya Mahila Bank in April.

In June, Reuters reported that the Indian government may opt for a large-scale merger of 26 banks into six large lenders.