Latest Bank merger news of PSU banks and PSU Insurance Company

 

A government document shared on social media has triggered speculation about possible PSU bank mergers between Union Bank and UCO Bank, and Bank of India and Bank of Maharashtra. The document, whose source couldn't be verified, said that a Parliamentary committee will hold discussions with four PSU banks in the first week of January under banking laws, which govern mergers and acquisitions, among other things.

However, the government has not yet provided official information regarding the merger. Neither of the four PSU banks mentioned have made any stock exchange filings in this regard.

The document being circulated on X (formerly Twitter) is a government PDF issued in the name of Ramesh Yadav, Under Secretary of the Government of India. The letter is issued to the Governor, Reserve Bank of India, Chairman of LIC, IRDAI, and NABARD, along with MD and CEOs of UCO Bank, Bank of Maharashtra, Bank of India, and Union Bank of India.

The PDF is also addressed to CMDs of New India Assurance Company, United India Insurance Company, Oriental Insurance Company, National Insurance Company, and MD & CEO of SBI Life Insurance Company. The subject of the alleged government PDF states 'Study Visit programme of the Committee on Subordinate Legislation, Lok Sabha to Mumbai and Goa from 2 to 6 January 2024'.

The 2-day programme includes informal discussions with the representatives of Union Bank of India and UCO Bank on January 2, and with representatives of Bank of Maharashtra and Bank of India on January 4, 2024, on rules/regulations framed under Banking Regulations Act 1949 and other relevant Acts as applicable to them and the regulatory mechanism in post-merger scenario.

The Finance Ministry has reportedly issued a clarification, saying that this is a parliamentary committee on subordinate legislation, and it has no connection whatsoever with the policies of bank mergers, according to CNBC-Awaaz. Amid the merger buzz, the ministry reportedly changed the agenda of its meeting. According to the new agenda, there is no mention of the word “Merger”, which simply means that there is no proposal for a merger between Union Bank of India and UCO Bank, Bank of India, and Bank of Maharashtra, said CNBC Awaaz in its report.

Meanwhile, No proposal to merge the public sector banks is being considered by the government and the discussions were part of a ‘routine exercise, Reuters also reported citing two sources from the Ministry of Finance.

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Cabinet approves RBI's proposal to merge Lakshmi Vilas Bank with DBS Bank, all branches to function as DBS Bank, says RBI

Union Cabinet on Wednesday approved the merger of capital-starved Lakshmi Vilas Bank (LVB) with DBS Bank India. The Reserve Bank of India on 17 November proposed the merger of the 94-year-old lender with the Indian arm of Singapore’s DBS Bank. As part of the amalgamation, DBIL will infuse fresh capital of Rs.2,500 crore into LVB.

The central bank on 17 November placed Lakshmi Vilas Bank under one-month moratorium, superseded its board and capped withdrawals at Rs.25,000 per depositor. "With the merger, there will no further restrictions on the depositors regarding the withdrawal of their deposit," Union minister Prakash Javadekar said.

Analysts and global credit rating agencies have applauded RBI's move and said that it will benefit both parties. "The quick action taken by the RBI in the Laxmi Vilas Bank matter affirms the faith of the depositors in the banking system," Ajay Shaw, Partner, DSK Legal.

"LVB merger with another bank is a very prudent step in order to save the depositors and to mitigate the systematic disruption associated with it. The image of government and regulator gets enhanced by such timely action and response," said S Ravi, former chairman of Bombay Stock Exchange (BSE) and Managing Partner of Ravi Rajan & Co.

DBS was the first foreign bank to receive a banking licence after the central bank allowed foreign banks to set up a wholly owned subsidiary in 2014. "With DBS likely to use digital capabilities to enhance its physical footprint in India, the proposed deal could lead to a 30-40% increase in Indian assets of DBS," said JPMorgan analysts Harsh Wardhan Modi and Saurabh Kumar.

The regulator had put LVB under Prompt Corrective Action in September 2019. The lender earlier reported widening of its net loss at Rs.397 crore in the second quarter ended September 2020 due to rise in bad loans and provisions. On 25 September, the shareholders of the bank had voted out seven members from the board, including the then MD and CEO S Sundar. The RBI on 27 September appointed the CoD composed of three independent directors Meeta Makhan, Shakti Sinha, and Satish Kumar Kalra, being headed by Meeta Makhan.

Moody’s said the merger will strengthen DBS’s business position in India by adding new retail and small and medium-sized customers.

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Merger News: Mega merger of 10 PSU banks takes effect; all you need to know

The merger of ten government-run banks into four will come into force from April 1. The branches of the merging banks will operate as branches of the banks in which they have been merged. Customers of merging banks will also now be treated as customers of the banks in which these banks have been merged. The banks' merger was announced last year in August and the union cabinet gave the final approval on March 4. In the past, various other bank mergers have taken place. For instance, in 2017, the country's largest public lender - the State Bank of India took over five of its associates and Bharatiya Mahila Bank. Last year, Vijaya Bank and Dena Bank were merged with Bank of Baroda. Kotak Mahindra Bankcand ING Vysya Bank merger and amalgamation of Centurion Bank of Punjab Ltd. with HDFC Bank took place in 2014 and 2008, respectively.

Here are a few aspects of the PSU bank merger:

1. As per the latest merger- Oriental Bank of Commerce (OBC) and United Bank of India (UBI) will be merged with Punjab National Bank (PNB). The merged entity will become the second-largest state-run bank. The new entity will have a business of Rs 17.95 lakh crore and 11,437 branches.

2. The amalgamation of Syndicate Bank into Canara Bank will create the fourth-largest public sector bank with Rs 15.20 lakh crore business and a network of 10,324 branches.

3. Allahabad Bank branches will operate as those of the Indian Bank. The merger of Allahabad Bank with the Indian Bank will create the seventh-largest public sector bank with Rs 8.08 lakh crore business.

4. Branches of Andhra Bank and Corporation Bank will function as the branches of Union Bank of India. Andhra Bank and Corporation Bank's merger with Union Bank of India will create India's fifth-largest public sector bank with Rs 14.59 lakh crore business and 9,609 branches.

5. The government had front-loaded Rs 68,855 crore to take care of the bank-merger plan.

6. Punjab National Bank was given Rs 16,091 crore, Union Bank of India Rs 11,768 crore, Canara Bank Rs 6,571 crore and Indian Bank Rs 2,534 crore. Allahabad Bank was provided Rs 2,153 crore, United Bank of India Rs 1,666 crore, Andhra Bank Rs 200 crore, Indian Overseas Bank Rs 4,360 crore and UCO Bank Rs 2,142 crore.

7. According to the government, the merger of the 10 banks will lead to the creation of stronger establishments. This merger would follow in the example of the amalgamation of Bank of Baroda, Vijaya Bank, and Dena Bank last year.

8. With this mega-bank mergers, the number of PSBs will get consolidated from 27 banks in 2017 to 12 banks in 2020.

9. The new 12 public sector banks will be -- six merged banks and six independent banks. State Bank of India, Bank of Baroda, Punjab National Bank, Canara Bank, Union Bank of India, Indian Bank will be the six merged banks. And Bank of India(BoI), Central Bank of India, Indian Overseas Bank, UCO Bank, Bank of Maharashtra and Punjab and Sind Bank, which have a strong regional focus, will remain independent entities.

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PSU banks announce share-swap ratios ahead of April 1 merger

Following the footsteps of State Bank of India and Bank of Baroda, the boards of 10 public-sector banks on Thursday approved mergers and issued share-swap ratios to create four large banks in the economy.

The four anchor banks will be Punjab National Bank, Canara Bank, Union Bank of India, and Indian Bank. The merger will be effective from April 1.

Last year, Bank of Baroda took over Vijaya Bank and Dena Bank. Before that, State Bank of India (SBI) had merged all its five associate banks with itself to enter the global top 50 banks’ list in terms of size. Punjab National Bank (PNB) will merge with United Bank of India and Oriental Bank of Commerce to create the largest bank in the country after State Bank of India.

According to notifications to the stock exchanges, Delhi-based PNB will issue 1,150 shares for 1,000 shares of Oriental Bank of Commerce, and 121 shares for 1,000 shares of United Bank of India.

Mumbai-based Union Bank of India will take Andhra Bank and Corporation Bank. Union Bank of India will issue 325 shares for 1,000 shares of Andhra Bank, and 330 shares for 1,000 shares of Corporation Bank.

Bengaluru-based Canara Bank will issue 158 shares for 1,000 shares of Syndicate Bank.

Allahabad Bank said for every 1,000 shares (face value Rs 10) of Allahabad Bank, there would be 115 shares (face value Rs 10) of Indian Bank.

The Union Cabinet had approved the consolidation to build the mega banks “to create more efficient and bigger public sector banks in the challenging environment to meet the credit needs of a growing economy and to achieve operational efficiency by scale of business”. The amalgamation will lead to a wide geographical reach, technology adaption, and, more importantly, better utilisation of scarce capital.

A grievance redress system has been put in place, and a committee has been formed headed by a retired judge. If shareholders have any issue with the swap ratio — for example, if they feel they didn’t get enough time or if they need information — they can raise it. This is the board-approved swap ratio.

“After the committee receives all the grievances, it will have seven days to recommend changes, if needed, which will be the final swap ratio,” said a top official of a PSB to be merged.

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Merger News: Cabinet approved plan for banking game-changer , 10 PSBs to turn into four big banks

The Cabinet has approved the consolidation of 10 public sector banks (PSBs) into four 'mega banks', Finance Minister Nirmala Sitharaman announced today. The Union Cabinet, she said, has given a go-ahead for the merger proposal and the government has been in regular touch with these banks.

"The banks' merger is on course and decisions have already been taken by the respective bank boards," she said. The Narendra Modi government had announced the mega merger in August last year.

As per the plan, United Bank of India and Oriental Bank of Commerce would merge with Punjab National Bank , making the proposed entity the second largest public sector bank.

Syndicate Bank will be merged with Canara Bank , and Allahabad Bank with Indian Bank . Similarly, Andhra Bank  and Corporation Bank  are to be clubbed with Union Bank of India.

Bank unions, who believe the merger is not a solution to the banking sector's problems, are opposed to the move.

The idea had been first publicly mooted in December 2018 when the RBI said that India could create some global banking majors if the then-ongoing mergers of some state-owned banks achieve the desired impact of creating stronger and well-capitalised lenders of global scale.

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Strike call by union this month to protest against merger of PSU banks

Days after bank unions called off a three-day bank strike from March 11, two unions called for another bank strike on March 27 to oppose the mega merger of PSU banks. Finance Minister Nirmala Sitharaman announced yesterday that the Union Cabinet has approved the plan to merge 10 PSU banks into four larger banks. The merger comes into effect from April 1 this year.

The All India Bank Employees' Association (AIBEA) and All India Bank Officers Association (AIBOA) have given a joint call for an all-India bank strike on March 27. Their demands include stopping the proposed merger of 10 PSU banks, stopping the privatisation of IDBI Bank and rollback of banking reforms, recovery of bad loans and increase of interest rate on deposits.

C.H. Venkatachalam, general secretary, AIBEA, said, the unions have planned series of protests this month peaking with the strike on March 27. The Bank Employees Federation of India (BEFI) has also announced a fortnight-long agitation programme to protest against the merger."Banks themselves face problems due to huge pile of bad loans. While the public sector banks made a total gross profit of Rs.150,000 crore for the year ended March 31, 2019, because of total provisions towards bad loans, etc. amounting to Rs.216,000 crore, the banks ended in a net loss of Rs.66,000 crore," Venkatachalam said.

Sitharaman, on the other hand, said the merger plan would enhance customer convenience, better branch service, higher credit flow, and lesser time in loan sanctions. Greater scale and synergy through consolidation would lead to cost benefits which should enable the PSBs enhance their competitiveness and positively impact the Indian banking system, a Finance Ministry statement said.

As per the amalgamation plan, United Bank of India and Oriental Bank of Commerce would be merged with Punjab National Bank, making the proposed entity the second largest public sector bank. It was decided to merge Syndicate Bank with Canara Bank, while Allahabad Bank with Indian Bank. Similarly, Andhra Bank and Corporation Bank are to be consolidated with Union Bank of India.

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Kotak proposes ‘six-three-three’ formula for public sector banks

The chairman and managing director of the Kotak Mahindra Financial institution, Uday Kotak, on Friday proposed diluting authorities stake to underneath 50% in three of the 12 direct-owned banks and running the opposite three below public-non-public partnership.

“After the merger of varied direct-owned banks, we’re now the total map down to 12 direct-owned banks. I quiet divulge that now we want to catch a six-three-three system. Six banks ought to live within the general public sector. In three others, direct possession ought to transfer underneath 50%. And for the others, we ought to mediate out of the sphere and salvage out a transparent map for public-non-public partnership, with domestic and non-domestic avid gamers,” Kotak said, whereas speaking at the Asia Economic Dialogue (AED) in Pune.

He said India used to be at the cusp of making some serious selections within the financial sector and folk well-known to ask some sophisticated questions. “India nationalized its banking device in 1969. I desire some evaluation on the quantity of taxpayers’ cash that has been attach into these banks from 1969 to 2020…Then now we want to ask that over a duration of 70 years, what’s the return to the Indian taxpayers on the crores of rupees which were attach into the direct-owned banks?” Kotak said.

Kotak said he didn’t advocate transferring faraway from direct-owned banks, but direct possession, in a pair of of them, would possibly per chance per chance unbiased be diminished.

He added that he saw a skill battle for the worldwide financial technology train within the raze, between Western and Chinese systems, currently exemplified by the discuss over 5G wireless applied sciences that had been being aggressively marketed by Chinese corporations.

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Govt likely to notify merger of 10 PSBs this week; process to be completed by April

Centre on August 30 last year announced four major mergers of public sector banks, bringing down their total number to 12 from 27 in 2017. The move was aimed at making state-owned lenders global sized banks

Each bank is required to follow regulatory norms to protect minority stakeholders' interests

The Centre will likely notify the merger of 10 public sector banks to create four big banks this week. Once notified, board members of these banks will give their approval swap ratio for the mergers. Each bank is required to follow regulatory norms to protect minority stakeholders' interests. Reports say all 10 banks will complete the merger process by April.

"We are expecting the government to notify the merger this week," United Bank of India managing director Ashok Kumar Pradhan said, The Economic Times reported.

In the biggest consolidation exercise in the banking space, the government on August 30 last year announced four major mergers of public sector banks, bringing down their total number to 12 from 27 in 2017. The move was aimed at making state-owned lenders global sized banks.

United Bank of India and Oriental Bank of Commerce will be merged with Punjab National Bank, making the proposed entity the second largest public sector bank (PSB). Syndicate Bank will be merged with Canara Bank, while Allahabad Bank will be amalgamated with Indian Bank. Similarly, Andhra Bank and Corporation Bank will be consolidated with Union Bank of India.

Post the consolidation, Punjab National Bank will have a business size of Rs 17.94 lakh crore, becoming the second-largest PSB after SBI with a business of Rs 52.05 lakh crore. The consolidated Canara Bank will be the fourth-largest bank with a business of Rs 15.2 lakh crore, followed by Union Bank of India at Rs 14.59 lakh crore. After subsuming Allahabad Bank, Indian Bank will be the seventh-largest state-lender with business size of Rs 8.08 lakh crore.

Bank of Baroda, after the merger with Vijaya Bank and Dena Bank, had become the country's third-largest bank. It has a business of Rs 16.13 lakh crore.

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AIBEA Wants PMC Bank to be Merged with any Public Sector Bank

                                  

Though the 11th Bipartite Wage revision of the Public Sector Banks are still pending for more than two years with the reason of higher Non performing assets (NPA), the employees union of the Public Sector Bank, All India Employees Association (AIBEA) geenral secretary has requested the finance minister to merge the defunct Punjab & Maharashtra Co-operative Bank with a Public sector Bank and lift the ban on withdrawal limit.

He said " it is necessary to lift the present ban and order the takeover of this Bank by a Public Sector Bank (PSB). We strongly feel that the City Co-Operative Urban Bank is a fit case for being merged with a Public sector Bank and its present licence should be cancelled forthwith.

Mr Venkatachalam also appealed to Finance Minister Ms Sitharaman to merge all Co-op Banks into PSU banks to avoid loot of deposits in the hands of political leaders who normally control them and convert the deposits into bad loans and put the depositors in dire financial stress when RBI applies the brakes through Audit and Inspection Department (AID) by applying 35 A restrictions, Make RBI accountable as single window to all depositors in Indian Union rather than dual reporting to RBI and Registrar of Co-op Societies in case of Co-op banks and in the bargain having no accountability with both washing off their responsibilities.

I don't know what to say about AIBEA approach but I believe that at this moment the much needed work is to settle the long pending salary of the bank employees and it is to remind the AIBEA leadership that there are more employees and their dependents suffering due to non settlement of the 11th bipartite as compare to PMC bank. First to look after the hunger of our own house than others.

Source - bipartitesettlement.com

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Share swap ratio of PSU bank after mega merger

ICICI Securities (I-Sec) on Tuesday estimated that Syndicate Bank shareholders would get 140 shares of Canara Bank for every 1,000 shares of Syndicate Bank, while Allahabad Bank shareholders would get 176 shares of Indian Bank for every 1,000 shares of Allahabad Bank.

As per estimation that while Oriental bank of Commerce (OBC) shareholders would get 1130 shares of Punjab National Bank(PNB) for every 1000 shares of OBC.United Bank of India shareholders would get 160 shares of Punjab National Bank(PNB) for every 1000 shares of United Bank of India,as a part of merger swap ratios.

Similarly Andhra bank shareholders would get 330 shares of Union Bank of India for every 1000 shares of Andhra Bank.Corporation Bank shareholders would get 320 shares of Union Bank of India for every 1000 shares of Corporation Bank.

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Was the exclusion of four banks a political gameplan?

Political considerations could possibly have been at play in the case of four out of six public sector banks that have been excluded from the mega merger announced by the governmenton Friday.

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.

A merger announcement involving BoM, which is the convener of the State-Level Bankers’ Committee (SLBC), at this stage could have given the Opposition parties a stick to beat the ruling party with during election campaign. SLBC is a consultative and co-ordination body of all financial institutions operating in each state.

With two Kolkata-headquartered public sector banks (PSBs) – Allahabad Bank and United Bank of India – set to be merged with other larger banks, the government would have felt the need to ensure that at least one PSB (UCO Bank) continues to be headquartered in India’s largest city in the East, which is the hotbed of trade union activities. Moreover, this decision comes in the backdrop of the BJP trying hard to make inroads into the State.

Allahabad Bank and United Bank of India are proposed to be merged with Chennai-headquartered Indian Bank and Delhi-headquartered Punjab National Bank, respectively.

Sources reasoned that Delhi-headquartered Punjab & Sind Bank could have been left out of the mega PSB merger as the BJP did not want to disturb its political equation with ally Shiromani Akali Dal and rub the powerful Shiromani Gurudwara Prabhandak Committee, which controls all historical Gurudwaras in the country, the wrong way.

Chennai-headquartered Indian Overseas Bank (IOB) may have been kept out of the mega PSB merger as it is not only weighed down by huge bad loans but also because there could have been adverse reaction from local political parties in Tamil Nadu.

Two large PSBs – Bank of India and Central Bank of India – have not been included in the latest round of consolidation, probably because they are reeling under huge bad loans.

Source - The Hindu Business Line 

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How the mega bank mergers will impact you

With 27 public sector banks, including the second largest PNB, being merged and reduced to 12, almost every other individual who has a savings account or fixed deposit with a public sector bank is likely to be impacted.

The finance minister in the press conference here today said that the 27 public sector banks existing in 2017 will be reduced to 12 after the mergers announced are implemented. Merger of six smaller PSBs with State Bank of India and the merger of Vijaya Bank, Dena Bank with Bank of Baroda has already taken place. Therefore, 10 public sector banks have already been reduced to two larger ones i.e the post-merger SBI and post-merger BoB.

The finance minister, Nirmala Sitharaman in her press briefing said that the creation of next-generation banks was imperative for India to become a $5 trillion economy in the next five years.

Here is how you are likely to be impacted:

1. Get ready to change your cheque books as the various banks get merged. While the existing cheque books may remain valid for sometime, ultimately they will be replaced with the cheque books of the merged entity.

The next-gen PSBs:

Anchor bank 

Punjab National Bank 

Amalgamating bank 

Oriental Bank of Commerce, United Bank of India

Anchor bank

Canara Bank 

Amalgamating bank

Syndicate Bank

Anchor bank

Union Bank of India

Amalgamating bank

Andhra Bank, Corporation Bank

Anchor bank

Indian Bank

Amalgamating bank

Allahabad Bank

2. You would have given your bank account numbers and IFSC codes for various financial transactions -- auto credit of dividends via ECS, auto-credit of salary, auto debit of various bills/charges etc. Unless these accounts are seamlessly merged into the financial system of the new merged bank, you would be required to change the details of your bank given for these purposes. A couple of years, when five associate banks of State Bank of India (SBI) were merged, IFSC codes and names of 1,300 branches were changed. The banking behemoth has changed the names and IFSC codes of branches located in major cities such as Mumbai, New Delhi, Bengaluru, Chennai, Hyderabad, Kolkata and Lucknow. Those who had auto-debits running with these banks like systematic investment plans (SIPs) in mutual funds were impacted. This could be an issue that accountholders of the banks that will be merged now might face.

3. Credit/debit cards issued by the merging banks may have to be exchanged for those of the merged entity although the former are likely to remain valid for the interim period to ensure no disruption in services.

4. Paperwork and keeping financial trail of fixed deposits made will increase a bit as these will be transferred into the merged bank.

5. It is, however, not clear what will happen to the interest rates of those who have loans running with these banks as the MCLR rates are different for different banks.

6. Shareholders of the the publicly listed banks will be impacted. How much the respective shareholders will be impacted will be known once the swap ratios are announced.

6. A plus point is that the branch network would become larger so access to bank branches would become easier provided the merged entity does not shut down all branches of merging banks. The combined entity of Punjab National Bank, Oriental Bank of Commerce, and United Bank of India will become the second largest PSU bank in the country with the second largest bank branch network with 11,437 branches. PNB will be the anchor bank. In the case of the consolidated Indian Bank and Allahabad Bank entity, it will be the seventh largest PSB. Canara and Syndicate Bank will also be merged to become the fourth largest bank. Indian Bank and Allahabad Bank merged. The consolidated Indian Bank and Allahabad Bank will become the seventh largest bank.

7. There is a section of accountholders who will not impacted by these mergers. Sitharaman said that Bank of India, Central Bank of India will continue as is. Indian Overseas Bank, UCO Bank, Bank of Maharashtra and Punjab and Sindh Bank will also continue to operate as is.

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Merger of PSU Banks : 10 PSU Banks to be merged in to four

Finance Minister Nirmala Sitharaman today announced a big consolidation of public sector banks: 10 public sector banks to be merged into four. Under the scheme of amalgamation,

Indian Bank will be merged with Allahabad Bank (anchor bank - Indian Bank); 

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

Union Bank of India, Andhra Bank and Corporation Bank to be merged (anchor bank - Union Bank of India); and 

Canara Bank and Syndicate Bank to be merged (anchor bank - Canara Bank). 

Bank of India, Central Bank of India will continue as public sector banks.

In place of 27 public sector banks in 2017, now there will be 12 public sector banks after the latest round of consolidation of PSU banks. The consolidation of public sector banks will give them scale, the finance minister said.

The government also announced capital infusion totalling over ₹55,000 crore into public sector banks: PNB ( ₹16,000 crore), Union Bank of India ( ₹11,700 crore), Bank of Baroda ( ₹7000 crore), Indian Bank ( ₹2500 crore), Indian Overseas Bank ( ₹3800 crore), Central Bank ( ₹3300 crore), UCO Bank ( ₹2100 crore), United Bank ( ₹1,600 crore) and Punjab and Sind Bank ( ₹750 crore).

Last year, the government had approved the merger of Vijaya Bank and Dena Bank with Bank of Baroda (BoB) that become effective from April 1, 2019. In 2017, the State Bank of India absorbed five of its associates and the Bharatiya Mahila Bank.

Finance Minister said We want banks with strong national presence and enhanced risk appetite

Indian Bank to be merged with Allahabad Bank (anchor bank - Indian Bank).

Consolidated Indian Bank and Allahabad Bank to be 7th largest public sector bank with Rs 8.08 lakh crore business (anchor bank - Indian Bank)

OBC and United Bank to be merged in PNB.

Andhra Bank and Corporation Bank to be merged in Union Bank of India.Consolidated Union Bank of India, Andhra Bank and Corporation Bank to be 5th largest public sector banks with ₹14.6 lakh crore business

Canara Bank and Syndicate Bank to be merged.Consolidated Canara Bank and Syndicate Bank to be 4th largest public sector bank with₹15.2 lakh crore business

No retrenchment has taken place post merger of Bank of Baroda, Dena Bank and Vijaya Bank; staff has been redeployed and best practices in each bank have been replicated in others

8 PSU banks have so far launched repo rate-linked loans

Loan tracking mechanism in PSU banks is being improved for the benefit of customers

4 NBFCs have found liquidity support through PSU banks since last Friday

For NBFCs, partial credit guarantee mechanism has already been implemented

Govt working on banking reforms

Gross NPAs of PSU banks have come down

Provision coverage ratio highest in 7 years

Best practices of each bank in consolidation of Vijaya Bank, Bank of Borada and Dena Bank have been absorbed

Non-official directors to perform role analogous to independent directors

Public sector banks enabled to do succession planning

Bank boards given flexibility to fix sitting fee of independent directors

"To make management accountable to board, board committee of nationalised banks to appraise performance of general manager and above including managing director," Sitharaman said.

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Indian Bank opposes merger with OBC, says has well-laid out plan for 3 years

Oriental Bank of Commerce (OBC) may have floated the idea of a merger of two other state-run lenders – Indian Bank and Corporation Bank – into itself, but the Chennai-based bank doesn't seem to be interested. In a statement on Wednesday, Indian Bank said its board doesn't have any such proposal, showing its intent against any such potential merger into OBC should the government ask for its view. “There is no such proposal with the board of the bank,” it said. “The bank has a well-laid out business plan for the next three years, with a clear visibility on growth, earnings and asset quality that create significant value for all its stakeholders.”

Banking sources had told FE that OBC had sought the finance ministry's approval to combine with Indian Bank and Corporation Bank. The ministry would consider OBC's proposal and take a view soon, one of the sources had said.

OBC – which was facing restrictions under the central bank's Prompt Corrective Action (PCA) framework until early February – recorded a net profit of Rs 201.5 crore in the March quarter, compared with a net loss of Rs 1,650.22 crore a year earlier. Even sequentially, the profit surged 39%.

However, Corporation Bank's losses zoomed to Rs 6,581.49 crore during the fourth quarter of FY19, against Rs 1,838.39 crore a year before. Indian Bank saw a net loss of Rs 190 crore in the March quarter, against a net profit of Rs 132 crore in the same period last year.

While the headquarters of OBC is in Gurugram, those of Corporation Bank and Indian Bank are in Mangalore and Chennai, respectively.

Indian Bank's net NPA ratio was the lowest of the three – 3.75%, against OBC's 5.93% and Corporation Bank's 5.71%. At 11.29%, Indian Bank's tier-i capital was higher than OBC's 9.98% and Corporation Bank's 10.52%.

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Big bank theory: This two PSU Banks may merge into Oriental Banks of Commerce (OBC)

With a heavy mandate to push reforms, the BJP-led government may soon kick-start the next phase of consolidation in the public-sector banking space with an amalgamation of three lenders — Oriental Bank of Commerce (OBC), Indian Bank and Corporation Bank.

Banking sources told FE that OBC has sought the finance ministry’s approval to combine with Indian Bank and Corporation Bank. The ministry will consider OBC’s proposal and take a view soon, one of the sources said. However, there is no formal announcement from the finance ministry on the matter yet. Another source said the government may infuse `40,000-50,000 crore into public-sector banks (PSBs) this fiscal, having already provided `1,06,000 crore in FY19.

The merger, if implemented, will be part of the government's efforts to create a few but strong banks with much larger balance sheet to support the rising credit appetite of the fast-growing economy and enable optimum utilisation of resources.

The successful experience of merging State Bank of India with five of its subsidiaries and Bharatiya Mahila Bank, and the amalgamation of Bank of Baroda, Vijaya Bank and Dena bank have given the government confidence that more such consolidation exercises can be handled without any hiccups.

OBC — which was facing restrictions under the central bank's Prompt Corrective Action (PCA) framework until early February —recorded a net profit of Rs 201.5 crore in the March quarter from a net loss of Rs 1,650.22 crore a year earlier. Even sequentially, the profit surged 39%. However, Corporation Bank's losses zoomed to Rs 6,581.49 crore during the fourth quarter of FY19, against Rs 1,838.39 crore a year before.

Indian Bank saw a net loss of Rs 190 crore in the March quarter, against a net profit of Rs 132 crore in the same period last year. While the headquarters of OBC is in Gurugram, those of Corporation Bank and Indian Bank are in Mangalore and Chennai, respectively.

Earlier, there were reports of Punjab National Bank (PNB) amalgamating with OBC and some other smaller banks, such as Punjab & Sind Bank, Allahabad Bank and Andhra Bank. However, given that PNB is still not out of the woods, any such plan may wait until the bank's results for the first quarter of this fiscal are out. PNB recorded losses of Rs 4,750 crore in the March quarter, against a net loss of Rs 13,417 crore in the same quarter last fiscal when the Nirav Modi fraud came to light. It, however, had recorded a net profit of Rs 247 crore in the third quarter of FY19.

Upon amalgamation, the merged entity will have a combined deposits of `6.6 lakh crore and advances of Rs 4.8 lakh crore, said the sources. The net NPA ratio of OBC stood at 5.93%, while that of Corporation Bank and Indian Bank was 5.71% and 3.75%, respectively at the end of March.

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