Published: Sat, August 31, 2019
Finance | By Kristine Clayton

‘Indian Bank, Allahabad Bank merger may be a smooth affair’

‘Indian Bank, Allahabad Bank merger may be a smooth affair’

The Finance Minister further said that the Bank of India and Central Bank of India would remain independent.

For example, with Maharashtra Assembly elections scheduled to take place in October, Bank of Maharashtra (BoM) may have been left out of the scheme of things vis-a-vis amalgamation.

Prior to this, the government had merged five associate banks of SBI and Bharatiya Mahila Bank with State Bank of India. SLBC is a consultative and co-ordination body of all financial institutions operating in each state. "Gross bad loans of public sector banks have come down to Rs 7.9 lakh crore from Rs 8.65 lakh crore at December-end 2018", Sitharaman stated.

Objective of the mergers, she said is to make them global sized banks.

ALSO READ: What can the bank mergers announced by the Finance Minister do to your account?

The gross bad loans of public sector banks have come down to 7.9 lakh crore rupees from 8.65 lakh crore rupees in December past year.

In April, the government had merged state-owned Bank of Baroda with Dena and Vijaya Bank.

Narang said though he was hopeful that reform measures announced this month by Modi's newly re-elected government would give the economy a boost in the coming quarters. While PNB will get approximately Rs 16,000 crore, Union Bank will receive Rs 11,500 crore, Bank of Baroda Rs 7,000 crore, Canara Bank Rs 6,500 crore, United Bank Rs 11,700 crore, Uco Bank Rs 2,100 crore, Indian Overseas Bank Rs 3,000 crore besides others.

The government also announced the merger of Canara and Syndicate Banks which will be fourth largest PSB with 15.2 Lakh Crore rupees of business.

PNB, OBC and United Bank to be merged (PNB will be the anchor bank).

The second will consist of Union Bank, Andhra Bank and Corporation Bank.

Finance ministry officials are meeting the heads of 10 public sector banks on Friday.

Also, bank boards will be given flexibility to fix sitting fee of independent directors, she said, adding that non-official directors will perform role analogous to independent directors.

Mona Khetan, banking analyst, Reliance Securities, said: "A big positive from today's FM address was the recruitment of CRO (chief risk officer) from market at market-linked compensation for PSBs, which could improve the underwriting standards at these banks, a long-time concern".

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