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Merger of PSBs: Not aware of any specific consolidation proposal, says FM Piyush Goyal

This clarification comes on the back of a media report which said the government is planning to merge PNB, OBC and Punjab & Sind Bank.

February 07, 2019 / 04:05 PM IST
 
 
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Finance Minister Piyush Goyal on February 7 said he is not aware of any specific consolidation proposal for state-run banks.

This clarification comes on the back of a media report which said the government is planning to merge Punjab National Bank (PNB), Oriental Bank of Commerce (OBC) and Punjab & Sind Bank (P&SB).

"An inter-ministerial group (called Alternative Mechanism) under Union Minister Arun Jaitley will take a final call on this plan. The (merger) option is on the table but whether the government is going to bite the bullet ahead of polls and announce amalgamation or choose to wait is yet to be seen," a source told Financial Express.

Post-merger, the entity will have a combined business of over Rs 16.5 lakh crore, deposits of Rs 9.6 lakh crore and advances of close to Rs 7 lakh crore, the report stated, adding that this entity will become the second biggest public sector bank, pipping the recently merged Bank of Baroda, Vijaya Bank and Dena Bank.

On February 5, PNB reported a surprise net profit of Rs 246.5 crore for the December quarter. This implies a jump of 7 percent from Rs 230 crore that the bank posted during the same quarter of last year.

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In the case of OBC, the Reserve Bank of India (RBI) on January 31 removed it from its weak-bank watch list, a move that will lift lending restrictions on it. A day’s prior, aided by a tax write back of Rs 2,862.44 crore, the bank posted a net profit of Rs 144.96 crore for Q3 FY19 versus a net loss of Rs 1,985.42 crore in the same quarter of last year.

For four quarters in a row, P&SB has been posting losses.

The government has been on M&A spree buoyed by is successful experience of merging State Bank of India with five of its subsidiaries and Bharatiya Mahila Bank, and the amalgamation of Bank of Baroda, Vijaya Bank and Dena Bank. The Centre aims to create a few but strong banks with much larger balance sheets to support the rising demand for credit and for optimum utilisation of resources.

However, the report quoted a source saying that despite an improvement in their finances, PNB, OBC and P&SB are "not out of the woods yet, so the government may choose to wait until their recovery takes root".
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