Merger of public sector banks on schedule, says Nirmala Sitharaman

Nirmala Sitharaman
Finance Minister Nirmala Sitharaman on Wednesday reiterated that the consolidation of 10 state-owned banks is on course and will take place according to the schedule set by the government.

Her comments come even as the Union Cabinet didn’t take up an important notification, supposed to be issued by the finance ministry, to take the process of the bank merger forward.

“There are no uncertainties about bank mergers. I am also conscious about the extra work related to core banking… I have asked bankers to do (it). But on merger, we are going as per the schedule. There are no uncertainties and I am on course. There needn’t be any speculation,” Sitharaman said during a press briefing on Wednesday.

However, in the meeting with the public sector bank (PSB) brass, Sitharaman didn’t discuss the amalgamation process, a banker said. “Meeting April 1 deadline looks difficult from here on out,” said a chief executive officer of a PSB, requesting anonymity.

The government’s notification related to the amalgamation scheme has been delayed, sparking concern among the boards of banks 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.

Business Standard reported on February 15 that the Union government was treading cautiously on the issue, even though the deadline to merge the balance sheets of these lenders was over a month away.

A senior government official said 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 finance ministry is likely to give a presentation to the prime minister before a final decision is taken.

In the past few days, the government has asked banks to give details about their plans on raising capital through the equity and bond markets, among other parameters following the completion of the merger process.

In the case of BoB, the process of finalising the swap ratio, for the integration of market stocks, took 49 days after the government’s notification came out. A senior finance ministry official said the government may go for shorter timelines in terms of receiving public grievances on the swap ratio of banks.

On their part, banks have finalised the swap ratio for the merger of the market stocks. “But without a notification, it cannot be announced,” a chief executive of another PSB said.

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.

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