What is consolidation of banks and does it really help boost the economy?

Consolidation of banks is a phenomenon of amalgamating one or more banks into the other bank. The bank into which other banks merged is called the “Anchor Bank”.

The Mega consolidation of banks announced by Honourable Finance Minister Nirmala Sitaraman would help make them with a size comparable to global banks and capable of competing effectively in India and globally. Besides, consolidation would also provide stimulus to amalgamated entities by increasing their ability to lend more. Lending huge amounts will nurture the investments resulting in the increased growth rate. Thus, the economy will get revived from the current slowdown.