RBI Governor Raghuram Rajan has advised caution in thinking about merger of two banks. Speaking in Mumbai today, Dr. Rajan said that if two unhealthy banks were merged, then the created entity will also be unhealthy and it could create a bigger problem in the economy. He, however, added that merging strong banks will bode well for the economy. Dr. Rajan further said one of the reasons why public sector banks were facing large asset quality problems was because of lending to the infrastructure sector, which for variety of reasons, has not proved to be as profitable.The apex bank chief further advocated the need for strong and effective bankruptcy laws in the country. He also said that there should also be a clear distinction between debt and equity, as we often confuse between the two while dealing with stressed assets.