Merger of four loss-making PSU banks on the cards
To order to bring in efficiency in the functioning of loss-making public-sector banks (PSBs) , the government is considering merging at least four such banks because of rising bad loans. The four banks are Oriental Bank of Commerce, Bank of Baroda, Central Bank and IDBI Bank with a combined loss of Rs 21,646 crore in FY18. In fact, barring Bank of Baroda, all the three banks are under Reserve Bank of India’s Prompt Corrective Action, a mechanism to maintain sound financial health of the banks. If any bank comes under the RBI’s Prompt Corrective Action, it cannot distribute dividends, remit profits and disburse fresh loans. Between the four banks, their gross bad loans or non-performing assets add up to nearly Rs 1,75,000 crore. Even Bank of Baroda, which is not under RBI’s Prompt Corrective Action, made a loss of Rs 3,342 crore in March 2018. Also, IDBI Bank has a gross NPA of over Rs. 55,000 crores at last count, which constitute 28 per cent of its total advances. This means mo...