The operation of the weak bank may be kept under moratorium for a certain period of time to ensure smooth implementation of the scheme. Many private sector banks have been merged with other private sector banks or the PSBs under this mechanism.
Since the onset of reforms in 1991, there were 22 mergers in the India banking space till 2010, 11 of which were compulsory mergers under Section 45 of the BR Act, 1949 (Bishnoi and Devi, 2015). However, one of the critical preconditions for this approach to succeed is that a substantial part of the banking sector be well-capitalised.