According to sources Union Bank of India is keen to acquire Bhartiya Mahila Bank (BMB) and is in talks with the Finance Ministry officials on BMB merger.
Even as government officials are said to be mulling the merger of Bhartiya Mahila Bank (BMB) with the country's largest lender State Bank of India, another state-run lender, Union Bank of India, is understood to have thrown its hat in the ring to acquire BMB.
CNBC-TV18's Ritu Singh reports quoting sources that Union Bank of India is very keen to acquire BMB and is currently in discussions with the Finance Ministry officials for that acquisition.
Bhartiya Mahila Bank was set up by the Congress-led UPA government in 2013 to exclusively cater to women entrepreneurs. The bank, however, has not made much of a dent in the market, with a small loan book of about Rs. 200 crores.
Sources in the bank say the Modi-government is of the view that there is no strong justification for the existence of a standalone bank to cater to women, especially given the push the government has given on the financial inclusion front which has brought the un-banked into the financial ecosystem, irrespective of their gender.
BMB currently has no bad loans on its books and has a network of 84 branches across the country, making it an interesting target for acquisition for another bank. The cherry on the cake is the Rs. 1000 crore capital sitting on the books of Bhartiya Mahila Bank.
Union Bank, with its Common Equity Tier 1 capital at mere 7.4% currently, will be able to benefit from this acquisition by improving its capital adequacy. Not only will the acquisition boost the acquiring bank's balance sheet, it will also give it access to low-cost deposits.
Sources have also told CNBC-TV18 that BMB is unlikely to merge with any bank before the end of this fiscal. Any merger will take place only in FY17.
In a response to CNBC-TV18's query on this story, Union Bank's CMD Arun Tewari said "Bank is in conformity with GOI's views about consolidation among banks. About BMB, its Government/MoF call. Therefore, as of now, we have no comments to offer."