infrastructure banks, about which the reserve bank in the recent monetary policy statement expressed its intention to usher in such differentiated banks in the coming times. 28. the advantage of being a differentiated bank is that its capital can be conserved and put to its best use. it can leverage its core strength, in a focussed manner. conclusion 29. let me conclude by saying that there is tremendous scope for consolidation among psbs. consolidation will bring efficiency and synergy of operations and will ensure that indian banking sector is capable of meeting credit demand of our growing economy. however, the consolidation needs to be a well - calibrated process based on sound economic logic. a hasty top - down approach which does not adequately consider synergies in the business models and compatibility in the business cultures and technology platforms of the merging banks may not be sustainable in the long run. and, finally, consolidation does not mean only merger of banks ; consolidation also means focussing on chosen businesses only. 30. thank you very much for your patient attention. bis central bankers ’ speeches

vysya bank had a stronger presence in south india while kotak had an extended franchise in the west and north india. the merger created a large financial institution with a pan - india presence. this kind of voluntary merger driven by synergy and clear economic logic has been rather common in the private banks segment. other examples of this kind of merger may be acquisition of bank of madura in 2001 and sangli bank in 2007 by icici bank, acquisition of centurion bank of punjab by bis central bankers ’ speeches hdfc bank in 2008, etc. the reserve bank has been given powers under section 44a of banking regulation act 1949 to approve such voluntary mergers. the reserve bank has been quite supportive of voluntary mergers of banks which have the prospect of creating value for those banks. however, such examples are not many in public sector banks sphere. recent merger of state bank of saurashtra and state bank of indore into state bank of india may be seen as basically merger among group companies. the only example of merger of two psbs is merger of new bank of india with punjab national bank in 1993. however, this was not a voluntary merger. 13. the other type of merger of banks has been from the perspective of resolution of a weak bank. section 45 of banking regulation act 1949 empowers the reserve bank to make a scheme of amalgamation of a bank with another bank if it is in the depositors ’ interest or in the interest of overall banking system. the operation of the weak bank may be kept under moratorium for a certain period of time to ensure smooth implementation of the scheme. many private sector banks have been merged with other private sector banks or the psbs under this mechanism. the merger of global trust bank with oriental bank of commerce in 2004 was an example of this kind of merger. earlier way back in 1960s, post palai central bank ’ s failure, there were several such mergers guided by the reserve bank. 14. since the onset of reforms, there have been about 32 mergers / amalgamations in the banking sector. prior to 1999, most of the mergers were driven by resolution of weak banks under section 45 of banking regulation act 1949. however, after 1999, there has been increasing trend of voluntary mergers under section 44a of banking regulation act 1949. as noted above, most of these section 44a mergers were among private sector banks. psbs have bypassed this trend despite the fact that there might have been ample opportunities of creating value through strategic mergers and