India needs “fewer and mega banks” that are strong, Finance Minister Arun Jaitley said after meeting the board of the Reserve Bank of India on Monday. Jaitley said specific details of the interim dividend that the central bank will pay the government were not discussed in the meeting, reported ET Now.

The finance minister justified the consolidation in the banking sector by saying that “in every sense, from borrowing rates to optimum utilisation, the economies of scale in banking sector are of great help”.

Last month, the government had approved the merger of Dena Bank and Vijaya Bank with Bank of Baroda to make it a globally competitive lender and the country’s third-largest lender. The new entity will come into force on April 1. Two years ago, five associates and the Bharatiya Mahila Bank had become part of the State Bank of India to create the country’s largest lender.

Jaitley also said there had been a healthy growth in revenue in the last five years.

Reserve Bank of India Governor Shaktikanta Das said he will meet the heads of public and private sector banks on February 21 to discuss the transmission of the reduction in interest rates to borrowers. Earlier this month, the central bank had lowered the repo rate, or the interest rate at which it lends to commercial banks, by 25 basis points to 6.25%. This was the first time in 17 months that the central bank has cut the rate.