Public Sector Bank merging is the need of the hour and panel on state run bank merger headed by finance minister has directed the banks to examine proposals for amalgamation. The final schemes formulated will be approved by the central government, and laid in both the houses of Parliament.
The consolidation of struggling state-run banks, which have a market share of about 70 per cent and account for over 80 per cent of bad loans in the Indian banking system. Government had announced a Rs 2.1 lakh crore capital infusion plan for state-owned banks.
Some seven banks – UCO, UBI, Indian Overseas Bank, Central Bank, Dena, Bank of Maharashtra and Corporation Bank – are considered “weak” as their NPA levels are above 15 per cent and they have limited strength to revive themselves.
It is believed that these banks may be merged before the final settlement of 11th Bipartite wage Settlement, as there would be larger burden on these banks to given the hiked salary to employees and pensioners.
Read : Calculate 11th Bipartite Wage Settlement
Finance ministry has given freedom to these banks to devise their own procedure for appraisal of amalgamation proposals by banks, and be guided overall by the objectives of the Nationalization Acts {Banking Companies (Acquisition and Transfer of Undertakings) Acts, 1970 and 1980}.
Read : Cabinet approves Guidelines For Merger of Public Sector Banks
Finance ministry has made it clear that the proposals received from banks for in-principle approval to formulate schemes of amalgamation will be placed before the alternative mechanism. A Report on the proposals cleared by alternative mechanism will be sent to the cabinet every three months.
The final picture is not yet clear but it is expected by end of February, 2018.