Govt considers Merging BOB, Central Bank, OBC and IDBI: Report
The proposal by the govt will be to control rising NPAs with which these banks are reeling with
These four entities are under stress with combined loss to the tune of Rs 21,646.38 crore in the FY 2017-18. The merger will allow the weak banks to sell assets, lessen overheads and shut money-losing branches, the report added.
This plan is followed by the statement made by RBI governor Shri Urjit Patel in April last year that the Indian banking system shall be in a better position upon consolidation of some of the PSU banks.
The anticipated merger of these PSU banks will help sell assets, reduce overhead cost and also close down loss sustaining bank branches. If the proposed plan gets implemented, the combined entity will be the second largest bank in India with combined assets worth Rs. 16.58 lakh crore.
This plan by the govt will be to restrain rising Non Performing Assets (NPAs) with which these banks are burdened with amid falling demand for corporate credit.
At the same time, there is a stake sale plan of 51 percent in IDBI Bank under consideration by the department of financial services for Rs. 9,000- Rs. 10,000 crore to a strategic partner.
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