Private banks are generally more adept at making growth moves, be it through M&As or through internal expansion. Says K.V. Kamath, managing director and CEO, ICICI Bank: None of our businesses have really reached the maturity stage, we are still in the growth cycle.” Non-food credit extended by scheduled commercial banks recorded an average annual growth of 26.1 per cent between 2002-03 and 2005-06, compared to 14.5 per cent during the preceding four-year period.

While the market does warm up to organic growth stories, what it really likes is M&As that make business sense. In a growing and fragmented industry, there should be many stories like that. Says Punit Srivastava, analyst, Enam Financial: “Banks in which foreign banks could acquire a stake are the stories the market is interested in. Some of the old private sector banks, with their regional but strong deposit base, could offer some leverage and synergies.” For example, Centurion’s expertise of retail lending and SME business was a good fit with Lord Krishna Bank’s deposit base. If and when the decks are cleared for public sector banks to go for M&As, the action could just explode.