Says Centurion Bank's executive director MJ Subbaiah, who is of the view that he is unfazed by the recent mergers of Bank of Madura (BoM) with ICICI Bank, and Global Trust Bank (GTB) with UTI Bank: "Consolidation in the banking sector is inevitable, but Centurion Bank is not all that concerned with this. We have no plans to merge as of now. We are now in the midst of a rights issue".

Brave words for sure, but from the writing on the wall, it is clear that unless you become big enough, you really do not have a chance. HDFC Bank, ICICI Bank and to-be-born, UTI Global Bank, have raised the threshold balance-sheet footing level closer to Rs 20,000 crore among the new smaller banks. These three banks now rival the likes of Citibank and Standard Chartered Grindlays or a Corporation Bank.

Take this specific example: With a networth of around Rs 1,000 crore, UTI Global Bank can now take an exposure between Rs 200-300 crore to a corporate under extant Reserve Bank of India guidelines. Compare this with the piffling amounts that it could have exposed itself to earlier.

But IndusInd Bank's senior vice-president Suresh Pai, is of the view that it is a really a toss-up between being a good bank or a big bank. "Size doesn't matter as it has its own limitations. A small size is better for effective management. As far as private-sector banks go, it is better for them to merge with those who have an institutional backing like in the case of ICICI Bank and BoM".

Many like Mr Subbaiah at Centurion Bank are of the view that the big three - HDFC Bank, ICICI Bank, and UTI Global - will compete for common-turf in many ways, and that may well make room for smaller players like Centurion Bank, IndusInd Bank, IDBI Bank, and BoP.

From the eight new generation private banks that kickstarted operations in 1994 - Times Bank, HDFC Bank, UTI Bank, GTB, ICICI Bank, IndusInd Bank, Bank of Punjab, and IDBI Bank, just four remain single. And that is a nice round number to have!

The recent spate of mergers have also shown that among institutional promoters - HDFC, ICICI and the Unit Trust of India (UTI) - are sharper than IDBI, which is clearly a laggard. The FI-promoted IDBI Bank is repositioning itself under an ex-Citibanker, Gunit Chadha; and trying to catch up with ICICI Bank and HDFC Bank. Analysts, though point out that with parent IDBI itself yet to come to terms with changes in institutional financing, it will be a tough call for IDBI Bank.

However, IDBI Bank's chief financial officer Vinit Kohli points that in all three cases - HDFC Bank, ICICI Bank and Global Trust-UTI Bank - efforts were long underway to reach a situation wherein a merger was warranted. "We are now undertaking measures. A time will come when we may well have to merge.

Judge us then", noted Mr Kohli. In other words: IDBI Bank is still to come of age. Among local institutional groups, HDFC, ICICI, UTI, have clearly taken the lead while IDBI and IFCI - the last-mentioned without a bank in its fold - continue to dither. Interestingly, three of the present chiefs: UTI chairman PS Subramanyam, IDBI chairman GP Gupta, and IFCI chairman PV Narasimhan, were all colleagues at IDBI and still earlier with the Reserve Bank of India. Mr Subramanyam, quiet clearly though, has repositioned his inheritence, UTI, with its subsidiary's upcoming merger with GTB. A moot point, though, is that many of these mergers may not really deliver. Says HSBC Securities' head of research Vasudeo Joshi: "These mergers will create a competitive environment for state-run banks. This will also mean further competition for the remaining private sector banks".But that may well be a case of over-simplification, as Mr Kohli sees it.

"It is wrong to say that an IDBI Bank will suddenly find itself under pressure to merge. We do not see a situation wherein the pricing will suddenly become finer", argues Mr Kohli.

It is also pertinent to note that ICICI Bank may well have to do some branch rationalisation in its life post-BoM. Again, in the case of UTI Global Bank,Different folks, with different views. But all this only underscores one point: that mergers are on top ofthe agenda!