PNB's Board To Meet Soon On Merger With Oriental Bank, United Bank

PNB's Board To Meet Soon On Merger With Oriental Bank, United Bank”

Nirmala Sitharaman Announces Amalgamation of 27 Banks in 4 Mega State-Run Bank Mergers, Only 12 PSBs Left in Country Now.

The OBC-UB-PNB compound will become the second-largest PSB after the State Bank of India, with a business of Rs 17.95 lakh crore and 11,437 branches.

For bigger banks, he said, the government has provided 0.25 per cent higher capital than required keeping in the mind their domestic systemically important status.

Earlier, responding to the government's plan, the All India Bank Employees Union has said the amalgamation would lead to closure of banks besides job losses.

He said "the meaning is that 6 Banks will now get closed".

Many economists say India's economic slowdown could continue for the next two to three years as the economy faces serious structural issues of a slowdown in consumer demand and decline in manufacturing growth. The announcement came just as India released data showing its economic growth in the April-to-June quarter fell to 5 per cent, the lowest level in more than six years.

He added that no one lost their job when the government helped facilitate the merger of Dena Bank and Vijaya Bank with Bank of Baroda previous year, creating the third-largest bank by loans in the country.

The PSU recapitalisation comes at a time when the country's GDP growth slowed to 5 percent, signalling the economy has not yet entered the recovery path.

Canara Bank will be merged with Syndicate Bank.

The government made a decision to go ahead with the mergers now because the banks are nearly adequately capitalized, there will be no disruption to business, and no bank employee will be hurt by the process, Finance Secretary Rajiv Kumar said in an interview.

The mergers, which cut to 12 the total number of state-owned banks from 27 in 2017, are the first since Indian Prime Minister Narendra Modi's government won re-election in late May. "The measures announced to improve corporate governance and groom leadership, if followed through with the right intent, resources and commitment, can go a long way in addressing the challenges that PSBs have been historically facing", said Prakash Agarwal, Head, Financial Institution, at India Ratings and Research (Fitch Group). In the Budget, a capital infusion of Rs 70,000 crore was announced. Meanwhile, Allahabad Bank will merge with Indian Bank.

In April this year, Bank of Baroda amalgamated with Dena and Vijaya.

"Accordingly, a meeting of the board of directors to consider the amalgamation will be convened by the bank shortly", PNB said. The decision to have separate mechanism for sanctioning and monitoring of big loans will ring-fence the banks against potential frauds. Also, boards will be given the flexibility to fix the sitting fee of independent directors, she said, adding that non-official directors will perform role analogous to independent directors.

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