Mumbai: The April 1 deadline set for the mega merger of 10 public sector banks is fast approaching, but it seems that these deadlines may go ahead as many regulatory approvals are yet to be received.
A bank official said that it may take at least 30-45 days to get the share exchange ratio, shareholders’ consent and other regulatory approvals, despite the Cabinet approval of the proposed Mahavilaya scheme. The official said that it is believed that the Prime Minister’s Office (PMO) has sought information from these banks about their financial forecasts for the next three to five years.
It has sought information about NPAs, capital requirement, loan growth and cost reduction from mergers. A senior public sector official said that the possibility of executing the merger from the beginning of the next financial year seems a bit unrealistic at the moment.
In addition to regulatory approvals, the merger plan will also be placed in Parliament for 30 days so that MPs can study it. The second part of the budget session will begin on March 2.
In August last year, the government decided to merge 10 public sector banks to form four large banks. According to the plan, United Bank of India and Oriental Bank of Commerce will be merged with Punjab National Bank. It will be the second largest public sector bank after this merger.
Syndicate Bank is to be merged with Canara Bank, while Allahabad Bank will be merged with Indian Bank. Similarly, Andhra Bank and Corporation Bank will be merged with United Bank of India.
A senior official said that even 10 months after the announcement of the merger, the process of information technology integration for merger with Vijaya Bank and Dena Bank’s Bank of Baroda is still going on. Also, human resource issues are hurting business and inconvenience to customers. Bank unions are also opposing the proposed merger. He says that the solution of the problems in the banking sector and the slowdown in the economy is not the merger of banks.