PSB Mega Mergers – Bank of Baroda, IDBI, Central Bank of India and OBC To Merge as Single Entity

Public Secotr Bank’s (PSB) merger talks started again – The government is planning to merge four state-owned banks, namely India’s third-largest PSU bank by assets Bank of Baroda, Central Bank of India, IDBI Bank and Oriental Bank of Commerce. Government is thinking differently as there are more than nine banks are under RBI’s PCA. With this mega merger the government hopes to help stem the rise in bad loans in their books at a time when poor asset quality has crippled the lending ability of some of them. 

Cabinet approves Guidelines For Merger of Public Sector Banks

The four banks that are being proposed to be merged are under pressure with combined losses of ₹21,646.38 crore in the year ended 31 March.

If merger of these four banks executed, the merged entity will become the second largest bank in the country after State Bank of India (SBI), with combined assets of Rs 16.58 trillion.

The merger will also allow the weak banks to sell assets, reduce overheads and shut money-losing branches. 

Comparison of Bank of Baroda vs Central Bank of India vs IDBI Bank vs Oriental Bank of Commerce.

Parameter (FY18)Bank of BarodaCentral BankIDBI BankOriental Bank
Net loss (Rs crore)1887.15139.68157.115871.74
Gross NPAs (Rs crore)56480.3938130.755588.2626133.64
Gross NPAs (%)12.2621.4827.9517.63

In personal opinion, wIth these mergers government just wanted to improve the overall average of NPA level. Your comments on this article appreciated!!

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