Banks in India|Bank Jobs|Bank Recruitment|Banking News,Information & Articles|Banking in India|Bank Loan|Bank Employment|Bank Interest Rate-BankingOnly.com
      Recent News :
Indian Banking : Corporate :

PSU Banks Next Consolidation by March 2018

By:  Ekata(Source : PTI, BS) , Place:  New Delhi ,  Update:11 Jun 2017

The SBI merger-success encouraged the Finance Ministry for considering another such proposal of further consolidation of the public sector banks upto March 2018 with a goal to create 4-5 global sized banks.

The SBI merger-success encouraged the Finance Ministry for considering another such proposal of further consolidation of the public sector banks upto March 2018 with a goal to create 4-5 global sized banks.

 

Five associate banks and Bharatiya Mahila Bank (BMB) became part of SBI on April 1, 2017, catapulting the country's largest lender to among the top 50 banks in the world.

Now, the Finance Ministry is looking to replicate the model in the case of other state-run banks so that they reach critical mass to compete with global peers.

 

"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," a senior official told PTI.

 

Toxic loans of public sector banks rose by over Rs 1 lakh crore to Rs 6.06 lakh crore during April-December of 2016-17, the bulk of which came from power, steel, road infrastructure and textile sectors.

 

Finance Minister Arun Jaitley has on several occasions said India needs 5-6 banks of global size and scale and further consolidation in the banking sector will be done at the appropriate time.

 

Whenever consolidation happens, it takes into consideration interest of all stakeholders including employees and shareholders, the official said, adding it has to be a win-win for all parties.

 

A balancing act has to be done before any merger is given clearance by various authorities and regulators, the official added.

 

The future merger proposals in the banking sector will also require clearance from the Competition Commission of India (CCI) to see if the merged entity is going to create a monopoly.

 

In the last consolidation drive that saw the light of day in April, CCI nod was needed only in the case of the merger of the BMB with SBI. There was no such requirement for the merger of associate banks with SBI as they were part of the parent.

 

The Finance Ministry has sought the help of the government think-tank NITI Aayog and global consultancy firms to examine the possibility of next round of consolidation of PSU banks with an aim to create a few lenders of global size and scale.

 

NITI Aayog's report is expected to set the tone of the roadmap for consolidation in the future.

There are factors like regional balance, geographical reach, financial burden and smooth human resource transition that have to be looked into while taking a merger decision, the official said.

 

The official added that there should not be the merger of a very weak bank with a strong bank "as it could pull the latter down".

 

"There are some low-hanging fruits. Big lenders like Bank of Baroda can take over some turnaround banks in the southern region such as Indian Overseas Bank. Dena Bank could be merged with some large South Indian Bank," the official explained.

 

Five associates and BMB became part of SBI on April 1, 2017, catapulting the country's largest lender to among the top 50 banks in the world.

 

State Bank of Bikaner and Jaipur (SBBJ), State Bank of Hyderabad (SBH), State Bank of Mysore (SBM), State Bank of Patiala (SBP) and State Bank of Travancore (SBT), besides BMB, were merged with SBI.

 

With the merger, the total customer base of the SBI reached around 37 crore with a branch network of around 24,000 and nearly 59,000 ATMs across the country. The merged entity began operation with the deposit base of more than Rs 26 lakh crore and advances of Rs 18.50 lakh crore.

 

The government in February had approved the merger of these five associate banks with SBI. Later in March, the cabinet approved the merger of BMB as well. SBI first merged State Bank of Saurashtra with itself in 2008. Two years later, State Bank of Indore was merged with it.

 

The bank employees unions and bank officers associations are against merger but govt is in mood of merger & consolidation. The bank 11th wage revision is also on verge and govt may attract bank employees good package along with five days week gift. Now in banking industry banks are closed on 2nd & 4th Saturday but govt may consider closure of bank on all Saturdays. The bank employees are more eager for five days banking than growth in substantial salary.

 
 
 
 Related News
This SBI Account Has No Minimum Balance Charges But Offers Same Interest Rate  (22 Sep 2017)
Bank of India mulling merger, says CEO  (19 Sep 2017)
SBI reviewing minimum balance charges for savings accounts  (18 Sep 2017)
Total stressed loans in banking unlikely to increase significantly: Crisil  (15 Sep 2017)
Banks shy away from companies facing NCLT action  (14 Sep 2017)
 Most Popular News
Bank Jobs : Apply Date and Recruitment Test Exams in 2014-2015 (02 Aug 2015)
Bank Branch ATM Space Required by banks in India: View and Apply (07 Aug 2014)
Bank Probationary Officer (PO) Starting Salary, Perk and facilities in India (02 Apr 2015)
Gratuity hike effective from 24.05.2010 : Gazette Notification (31 May 2010)
Clerical Cadre Common Written Exam, CWE 2011-2012 IBPS Notification: Online Appl .. (22 Aug 2011)
0 Recent Comments
 
0 More Comments
 
 
 
 
Comment
   
Your Name :
Email :
Comment :
 
click for new code
Security Code :
 
   
 
News Category
SubScribe