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It will all depend on the aggressiveness of the new LIC chairman - the present chairman, S B Mathur, will retire in October. LIC has excellent cash flows. Over Rs 60,000 crore flows into its coffers as annual premium income. LIC holds equity stakes both in Oriental Bank of Commerce (6.23 per cent) and UTI Bank (13.41 per cent).
If it gets the government's blessings and decides to play its cards judiciously, it could try and bring all three under one umbrella.

So Corporation Bank can gobble up a bank in western India and another in north India and get a balance sheet size of about Rs 1,00,000 crore, over 1,900 branches and a very strong ATM network. Add to this a bank in Kolkata and the entity will get a pan-Indian presence with a balance sheet of anywhere between Rs 1,25,000 crore and Rs 1,45,000 crore.

While the State Bank and LIC could be big participants in the M&A game, so too could IDBI. After the merger of IDBI Bank with IDBI, the size of its book will swell to Rs 80,000 crore. IDBI Chairman M. Damodaran has already made public his ambition to become No 2 in the Indian banking universe by swallowing up one or more nationalized banks. IDBI can also look at UTI Bank. However, with government backing, it will be easier for IDBI to try and take over a public sector entity.

Opinion of People Who Matter

Mr. Purwar of SBI in a Round Table Conference by Business Standard said, "The State Bank group is a group of nine. We can merge this group into one, or we can continue to have the present position with the difference that the technological platform of the entire group will be one. Business processes across the group will be the same. So what will happen is, although there will be nine faces of the bank, a virtual merger will be in place.

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* Contributed by -
Pritesh Y. Chothani, Ritesh Sud & Rachna Srivastava,
PGDBM 2006,
IMT, Ghaziabad.