The government on Tuesday said there was no move to merge all nationalised banks into seven large entities.

"There is no proposal before the government to merge all the nationalised banks into seven large entities," Finance Minister P Chidambaram said in a written reply in the Rajya Sabha.

He said the decisions regarding mergers and their timings have to be taken by the management of the concerned banks.

The minister said mergers, if based on the principles of business complementarity and synergy, can be helpful in terms of branch network rationalisation and in improving the competitiveness of the merged entities.

RRBs: Observing that regional rural banks could play a key role in providing rural credit, he said the government has decided to support a programme for improving their health and effectiveness.

"A hybrid model combining several options has to be evolved which may involve extensive amendments in the RRBs Act," he said.

The suggestions being considered included merger with sponsor banks and subsequent amalgamation into a single wholly-owned subsidiary of that sponsor bank, consolidation of all RRBs into a national rural bank and amalgamation of RRBs into zonal banks, he said adding each option had certain merits and demerits.