No reason to go back on govt's mega-merger plan for state-owned banks: FM

FM Nirmala Sitharaman | Photo: Kamlesh Pednekar
Finance Minister Nirmala Sitharaman said on Saturday that she saw no reason to go back on the government’s mega merger plan for state-owned banks.

“I don’t see any reason to go back or any reason (which is) particularly causing any delay in the notification. You will hear on it as and when a decision is made,” Sitharaman told the media here. She was responding to a question on the reasons behind a delay in the process of amalgamating 10 public sector banks (PSBs) into four.

She added that there was no discussion on the amalgamation of banks in the RBI’s central board meeting held on Saturday.

Business Standard reported on Saturday that the Union government was treading cautiously with the merger of PSBs even though the deadline to merge the balance sheets of these lenders was just one and a half months away.

On August 30 last year, Sitharaman had announced the biggest merger exercise of PSBs. Punjab National Bank, Oriental Bank of Commerce, and United Bank of India were supposed to combine to form the nation’s second-largest lender. Canara Bank was to take over Syndicate Bank; Union Bank of India is planned to be amalgamated with Andhra Bank and Corporation Bank; and Indian Bank was to be merged with Allahabad Bank. According to a senior government official, Prime Minister Narendra Modi wanted to see the “outcome of the amalgamation of Bank of Baroda (BoB)” before taking a final call on the merger of the 10 PSBs. 

The government’s notification related to the amalgamation scheme has been delayed, sparking concern among the bank boards about a possible delay in the merger process, which was supposed to take place by April 1, 2020 — the beginning of the next financial year. It is after the government’s notification that the process of amalgamation will move forward. 

Sitharaman further said the government was monitoring agricultural credit in rural areas, adding that she expected to meet the increased target of Rs 15 trillion in the coming fiscal year. In the Union Budget 2020-21, the government raised the farm loan disbursal target by 11 per cent to Rs 15 trillion for the next fiscal year.

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