Govt plans merger of four public sector banks to overcome losses

Mumbai: Around 19 of the 21 state-run banks have reported losses for the fiscal, including country's largest lender State Bank of India.

To empower the financial strength of certain debt-ridden public sector banks the government is planning a merger of four state-run banks considering of IDBI Bank, Bank of Baroda, Oriental Bank of Commerce and Central Bank of India, according to HT reports. The merger will help the banks to overcome the losses incurred in the past.

Bank of Baroda had reported a net loss of Rs 3,102.34 crore for the January-March quarter of 2017-18. Provisions for bad loans jumped to Rs 7,052.53 crore in the March quarter, from Rs 2,425.07 crore in the same period of 2016-17, according to a regulatory filing by the bank. The government had earlier merged State Bank of India with five other banks and Bharatiya Mahila Bank.

Asset quality of the bank worsened as gross non-performing assets or bad loans surged. The merger would allow the banks to sell their assets and reduce the cost of operations, it also plans to shut the branches that are incurring huge losses. The total loss of the four banks was above Rs 21,500 crore in the last fiscal.

If the government proceeds with the merger as planned, then the merged banks combine will become the second-largest bank in India. Currently State Bank of India is the largest state-run bank in India.