"Consolidation of RRBs is gathering pace. Nine states have been given approval. It now awaits my approval, which will be done today or tomorrow," he said after a marathon meeting with bankers in New Delhi.
If one bank has more than one RRBs in a state, then all these RRBs have to consolidated into one, he said, adding "the entire process will be completed by August 31, 2005."
The M&A process for commercial banks will be decided by government in due course after considering all suggestions from various corners, he said.
While ruling out diluting government stake below 51 percent in PSU banks, Finance Minister P Chidambaram on Friday set a target of bringing down non-performing assets from 3.0 per cent in 2004-05 to close to 2.0 percent this fiscal.
Banks will have to sign a MoU with government by June end or first week of July to improve other financial parameters like profit and business growth, return on assets and equity.
The performance of banks have been good in 2004-05 barring two -- Punjab & Sind Bank and Dena Bank, which will be called separately to present their action plans to reduce NPAs, he said, adding five other banks in the borderline have been asked to adopt multi-pronged strategy to bring down NPA.
Setting a new farm credit target of Rs 1,41,000 crore (Rs 1410 billion) for 2005-06 as against Rs 1,15,000 crore (Rs 1150 billion) disbursed last fiscal, Chidambaram said "credit to small and medium enterprises will be taken up as the next thrust area."