The Indian government is planning to merge the country's state-run banks to create five or six large banks, a leading newspaper said in a report on Thursday.
The Hindustan Times newspaper quoted unnamed, highly placed sources in the finance ministry as saying the government was also planning to create a large development financial institution by merging all existing development financial institutions.
"The idea is to create giant Indian financial entities that can take on competition in the global market," the paper said.
Indian finance ministry officials were not available for comment.
The newspaper said the government was considering an old proposal to merge the country's largest bank, State Bank of India (SBI), and its seven subsidiaries.
Asked about the report, SBI Chairman A.K. Purwar said: "If the government wants us to merge, we will do so. But as of now, I am not aware of this proposal."
SBI has around 9,000 branches and a share of around 20 percent of the banking industry's deposits and loans. If the associate banks are merged with it, SBI's network will exceed 14,000 branches and its market share will rise to 25 percent.
Other leading state banks include Punjab National Bank, Canara Bank, Bank of Baroda, Oriental Bank of Commerce and Corporation Bank.
The government was also evaluating the merger of development financial institutions such the Industrial Development Bank of India, IIBI Ltd and IFCI Ltd, the report said.
The banking industry is India's second-largest employer with around 800,000 workers. SBI, which handles one-fifth of the country's deposits and loans, employs a quarter of them.
Yet SBI, is not even among Asia's 10 biggest banks. Its market value of $5.1 billion is a fraction of world number one Citigroup's around $243 billion or HSBC's around $166 billion.