smooth implementation of the scheme. many private sector banks have been merged with other private sector banks or the psbs under this mechanism. since the onset of reforms in 1991, there were 22 mergers in the india banking space till 2010, 11 of which were compulsory mergers under section 45 of the br act, 1949 ( bishnoi and devi, 2015 ). however, one of the critical preconditions for this approach to succeed is that a substantial part of the banking sector be well - capitalised. if the potential acquirers are poorly capitalised, it may result in inefficiencies in prices as well as timing in resolution of weak banks, besides increasing the risk of weakening the acquirers themselves through such acquisitions. performance of the pca banks in india let me now turn to some data. the goal of the exercise will be to help understand the ten - year performance ( wherever data is available ) of banks on which the reserve bank has imposed the pca. the reason for examining the performance of these banks over a long time period is to appreciate the fact that the progress of banks under pca cannot be judged over a relatively short time scale. the longer the under - capitalisation and asset quality problems have festered, the more patient one has to be during the rehabilitation process. there is no quick fix or overnight silver bullet here ; the reforms have to be implemented and allowed to run their course ; they can ’ t be chopped or diluted mid - stream ; the focus has to be on stability that is durable. as i explain below, there are emerging signs that the performance of banks under pca is slowly but steadily being restored. presently, there are twelve banks, eleven in the public sector and one in the private sector, under the reserve bank ’ s revised pca framework, with pca having been imposed on them between february 2014 and january 2018. i will focus below only on the eleven psbs under the pca. the share of these pca banks in advances and deposits as on march 31, 2018 was 18. 5 % and 20. 8 %, respectively. the following trends emerge as one tracks the performance of these banks in terms of capitalisation and asset quality : ( i ) capitalisation ( chart 1, 2 ) : the declining trend of crar and tier - 1 capital ratio for pca banks that started in 2011 has been arrested and the ratio has been maintained steady since 2014 at or above internationally prescribed levels. it may, however, be

euro area can grow to a size that makes them globally competitive, the key words in this context being mergers, acquisitions, strategic alliances, joint ventures. secondly, internal competition - within the euro area - will also increase, as it is still the case that the bulk of the individual euro area countries ’ trade is with other participating countries. this trade is now domestic trade for the euro area as a whole, in which exchange rates no longer enter into the equation. both factors - a single large market and the intensification of internal trade - will tend to enhance what economists call the growth of potential output in the euro area. at least on the supply side, these factors are likely to boost productivity and growth in the euro area over the longer term as well. admittedly, fiercer competition will mean that the challenges become greater. competition exerts pressure : • on enterprises, to restructure if profit margins are shrinking ; • on both sides of industry, to stay within the available scope for productivity and to dismantle rigidities on the labour market ; • and on national policymakers, to create underlying conditions that are conducive to investment, to consolidate budgets, to put the social security systems on a sound basis, and to provide the right incentives on the labour market. if the countries sidestep this pressure to reform, a strain will be placed on the euro. alternatively, this pressure may mean the euro becomes a catalyst for devoting more energy to pressing ahead with necessary reform projects that have either been neglected or tackled only half - heartedly up to now. to that extent a stimulus exists for the euro area to develop into - shall i say - a “ new economy ”. i hesitate to use that term in this context as i know how difficult it is to identify - let alone, forecast such shifts in the trend - growth of economies. but there is also another reason why i hesitate to use that term : it is often used as a synonym for the proposition that all the laws of economics have now supposedly been suspended. that is nonsense, of course. technology changes, markets change, but economic laws do not. and, even in this brave new world, the rate of inflation will go up if monetary policy is overly expansionary. whatever one may make of the “ new economy ” - one thing is certain : the euro has enhanced europe ’ s potential for growth. and this was lent additional support by the declaration of intent of the heads of state and government of