After SBI, Now 10 PSU Banks Getting Ready For Merger
As it’s already known, the government is planning to merge all small banks into big banks to make global sized banks. In order for functioning of the same, earlier SBI was merged with 6 small banks and now the government is planning to merge other PSU banks. According to the finance ministry, the 6 small banks that are being noted for the new merger include United Bank, UCO Bank and Union Bank. Whereas the 4 big banks that are planned to be merged include PNB Bank, Bank of Baroda and Canara Bank. The first merger expected can be of Allahabad bank and PNB on 31st July 2017.
The bank’s share rose up to 3.40%
After the spreading of merger news of different banks, the share value raised and shares also got raised. On Wednesday at 2:45, the changes in different banks were noted like IDBI rose up at 3.40%, Syndicate Bank rose at 3.17%, Allahabad Bank at 2.98% and so on.
The plan is to create global sized banks
The main agenda behind all these mergers is that the government wants to create 4-5 global sized banks. Just like the SBI merger with 5 banks and Bharatiya Mahila Bank has made SBI one of the 50 biggest banks in the world. The Finance Ministry is willing to approve these proposals till the end of this financial year. Arun Jaitely has also said in many events that India needs 5-6 global level banks. Proper decisions regarding these consolidations will be taken soon.
NPA will be kept in mind while planning merger
According to a senior officer, the ministry is planning to do the same over different PSU banks to reach more and more people. “Consolidation is a must…but decision in this regard would be based on commercially prudent parameters. If the NPA situation gets better, there could be one more merger towards the end of this fiscal,” the official told PTI.
NPA of banks have increased
In the financial year 2016-17 the bad loans have been increased from 1 lakh crore to 6.06 lakh crores. The most of it is given in sectors like power, steel, road infrastructure and the textile sector.
The consolidation will be discussed with everyone
An official has said that whenever the consolidation will happen, it will include the decisions and ideas of different people. Not only just the shareholders but the employees will also be included. The government believes this will benefit everyone in the sector. The authorities and regulators will also discuss about the same. The merger request has to be approved from Competition Commission of India (CCI). The commission will make sure that the merging bank should not have a monopoly in the market.
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