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It will not help recover NPAs: unions
The government’s ambitious plan to merge three public sector banks — Bank of Baroda, Vijaya Bank and Dena Bank — could take at least one year to complete, banking industry officials said. The proposal to merge these banks, seen as long overdue, is being hailed by experts as it will provide scale. The combined entity will become the second largest public sector bank, with a balance sheet size of about Rs. 15 lakh crore.
“This is a remarkable step. But it still not a mandate. It’s the board of the banks [that] have to decide on one side and then the matter would be taken up in the formation of a scheme, submitted to the regulator and importantly it will require Parliament’s approval,” said Ashvin Parekh, managing partner of Ashvin Parekh Advisory Services. Mr. Parekh is of the opinion the merger process would take nine to 12 months to complete. R. Gandhi, former Deputy Governor, Reserve Bank of India (RBI) also thinks it would take one year for the merger to happen.
“The long-term synergies would be positive and this entity would emerge as a strong bank. Markets would look at this development with a one-two years horizon,” said Sanjiv Bhasin, EVP – markets and corporate affairs, IIFL. One of the biggest challenges for the merger is likely to be human resources management, Mr. Gandhi added.
Unions oppose move
The All India Bank Employees’ Association (AIBEA) has opposed the government’s proposal and demanded the decision be ‘reviewed and re-examined.’ “Merger of the banks will not help recover the bad loans,” C.H. Venkatachalam, general secretary, AIBEA said.
Source : https://www.thehindu.com/todays-paper/tp-business/amalgamation-may-take-1-year/article24972158.ece
