The Reserve Bank of India, he said, felt that implementation of Bassel II norms by scheduled commercial banks in the country was not something that calls for 'precipitative' action.
"Mergers and acquisitions is the process that has to take place on the basis of validity of dynamics that will come from bank board, " Reddy told reporters after a meeting of the central board of RBI in Kolkata.
The meeting was attended by two deputy governors, six executive directors and ten other directors of the bank.
''On our (RBI) part, we are in close touch with the banks in terms of giving our inputs for the mergers and acquisition in the industry,'' he said.
The RBI governor said M&A was a process and Union Finance Minister P Chidambaram had indicated the overall policy for the banking sector reforms. Commenting on the Bassel II norms, Reddy said the whole issue of its implementation was being reviewed by a committee, which is working on various requirements.
''It (implementation of the norms by old private sector banks) is not something that will happen within six months or one year from now... It is a process and even in developed countries it takes 3 to 5 years.''
''We are moving in that direction...It is not something that calls for precipititive action,'' Reddy said.
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