New Delhi, Aug 31 (IANS): Finance Secretary Rajeev Kumar said on Friday that the government will keep its stake in the nationalised banks at 51 per cent.

"PSU banks do a lot for the general public. The government will keep its stake at 51 per cent in the nationalised banks," he said at a Finance Ministry briefing to announce the mergers of PSU banks.

The government on Friday announced the mega-merger of 10 PSU banks into four entities, where the Punjab National Bank, the Oriental Bank of Commerce and the United Bank will merge to become the second-largest public sector bank (PSB) while the Canara Bank and the Syndicate Bank will amalgamate to set up the fourth-largest PSU banking entity. India will now have 12 state-run banks instead of 27.

Kumar said the time was right for PSU banks' consolidation, which would not cause any disruption in the banking system. He also maintained that 12 state-run banks were the right number.

On the likely date from when these mergers would be effective, he said the dates would be fixed later, as first the banks have to take the proposals to their boards for approval. Kumar also allayed any fears of job loss due to the mergers.

Earlier while announcing the mergers, Finance Minister Nirmala Sitharaman said the gross NPA level had come down to Rs 7.9 lakh crore in March 2019 from Rs 8.65 lakh crore in December 2018.

After recapitalisation of PSBs at different times, the government currently holds 91 per cent to 97 per cent stake in them. Though the government has been in favour of reducing the stake in the state-run lenders to 51 pert cent, it has never been in favour of shedding control on the nationalised banks.