The Government of India is reportedly planning another three-way bank merger as a part of its plan to consolidate the capabilities of state-owned lenders in the country.
According to a Financial Express report, the government is considering to merge fraud-hit Punjab National Bank (PNB), Oriental Bank of Commerce (OBC) and Punjab & Sind Bank (P&SB).
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The report comes close on heels of three-way merger of public sectors banks Bank of Baroda , Vijaya Bank and Dena Bank, which has been recently approved by the government India.
The consolidation of public sector banks is part of the government’s strategy to create public sector banks that are better equipped to absorb market shocks and also support the credit requirements of the country.
Details of bank merger:
The government is currently weighing the likely benefits the amalgamation of PNB, OBC and P&SB can yield, sources told the publication.
A ministerial group chaired by Union Finance Minister Arun Jaitley will take the final call on the amalgamation.
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By GlobalDataThe proposed merger will create a combined entity with business of INR16.5 trillion ($231.1bn).
The move could also have been prompted by a nearly $2bn fraud at one of the PNB branches in Mumbai around the same time last year. The fraud, regarded as one of the largest in India’s banking history, was carried out through unauthorised transactions.
PNB and P&SB are headquartered in the Indian capital of Delhi, while OBC’s main office is at Gurugram.
In the last one year, the government has taken multiple steps to revive the banking sector in the country. The steps included capital infusion and exploring potential combinations.
