Merger of IDBI, Central Bank, Oriental Bank and Bank of Baroda on Cards: Reports
The Finance Ministry is also simultaneously mulling over selling 51 per cent of the IDBI's stakes to a strategic partner.
Mumbai, June 4: Stressed under non-performing assets (NPAs), the government is reportedly mulling over merging four public lenders - IDBI, Central Bank, Oriental Bank of Commerce and Bank of Baroda. If the entities are combined into one, their collective value will add up to Rs 16.58 trillion.
The four banks are reeling under a combined loss of Rs 21,646.38 crore, as of March 31, 2018. The lopsided balance sheet has severely hurt the lending capability of the banks.
One of the primary objectives of the proposed merger, analysts claim, is to stem the rise of bad loans in the books of account. Secondly, the unification would allow the banks to reduce overheads, shutdown loss-incurring branches and sell non-utility assets.
According to reports, the Finance Ministry is also simultaneously mulling over selling 51 per cent of the IDBI's stakes to a strategic partner. The IDBI Bank is yet to issue a statement denying the reports of its proposed privatisation.
On May 21, however, the bank told the security exchanges that it would be moving a special resolution to raise capital.
The government had signalled the sale of stakes in IDBI back in February 2016, when Finance Minister Arun Jaitley had presented the Budget. In his speech, Jaitley said the government is considering to hold "less than 50 per cent stakes in IDBI" in the near-future.
The last merger of public-sector lenders was carried out in April 2017, when the State Bank of India (SBI) had taken over five of its associate banks, including the Bharatiya Mahila Bank.
(The above story first appeared on LatestLY on Jun 04, 2018 04:03 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).