The Narendra Modi-led government in its second term may propose a Bank of Baroda-like merger of other public sector banks instead of a mega merger, which has been mooted in recent discussions on consolidation, the Business Standard reported, citing people aware of the development.

The report further added that the deputy governor of Reserve Bank of India (RBI) MK Jain had an informal discussion about the PSB merger plan with financial services secretary Rajiv Kumar. The discussion was followed by another round of meetings between the officials and the RBI.

As per the Banking Companies (Acquisition and Transfer of Undertakings) Acts of 1970 and 1980, the finance ministry has to consult the RBI before formulating a plan for PSB merger.

The officials discussed various combination for merges, in which one of the proposals was of a mega-merger wherein eight to nine banks could be merged into two, Business Standard reported citing the source.

Another source said, "However, the plan was dropped. We can expect at least two sets of mergers this fiscal year on the lines of BoB-like consolidation."