Rather than merging government banks, they will be sold to private investors.

The government is currently not considering any further mergers of public sector banks. Instead, they are shifting their focus towards privatizing these banks, with plans to start this initiative at the beginning of the financial year 2025. Previously, numerous public sector banks have been merged; since 2017, almost 15 banks have consolidated, reducing the total number of public sector banks from 27 to 12. However, the government now views privatization as a more effective strategy to strengthen and streamline the banking sector.

Earlier reports suggested that if the BJP returned to power, the Finance Ministry might pursue further mergers, given the improved conditions of the banks post-merger. This improvement was partly due to the capital the government injected into banks with high non-performing assets (NPAs).

The latest development indicates that the government is now contemplating selling its stakes in these banks, starting with IDBI Bank in the financial year 2025. The government currently holds a 45 percent stake in IDBI Bank, while LIC owns 49.24 percent. The plan is to sell their combined stake of 60.7 percent, which would fully privatize the bank. Entities like Kotak Mahindra Bank, CSB Bank, and Emirates NBD have shown interest in acquiring a stake in IDBI Bank.