Public Sector Banks Merger 2.0? PNB, UBI And BoI May Come On The Merger Table

Buoyed by the successful merger of Public Sector Banks namely Bank of Baroda, Dena Bank and Vijaya Bank, the Government of India is now expected to invite select lenders like Punjab National Bank (PNB), Union Bank of India (UBI) and Bank of India (BoI) for discussion on another round of merger, reports Economic Times.

Of the aforementioned banks, PNB and UBI are in early stages of recovery and have registered healthy growth in bygone quarters. However, the BoI has just got out of the Prompt Corrective Action (PCA) framework of the Reserve Bank of India (RBI) which had imposed severe restrictions on its lending activity owing to weak financial position.

Also, it has been noted that smaller Public Sector Banks have begun consolidating their operations in same geographies by closing overlapping branches and focusing on niche work areas.

Nonetheless, the talk about another banking merger gains significance as even if the banks themselves are not able to give options for mergers, the Government's Alternate Mechanism (AM) group can make suggestions as it did in case of just culminated merger of Bank of Baroda (BoB), Vijaya Bank and Dena Bank.

The Government's AM group had proposed their merger in October 2019 to create the country’s third-biggest lender.

The said AM group is headed by Finance Minister Arun Jaitley.

It must also be noted that Punjab National Bank managing director and chief executive Sunil Mehta had said recently that his bank had now made a turnaround and could consider offers for acquiring other lenders. “It all depends on the offers,” he said.