Bankers' Club

Government is considering merger of four public sector banks, Bank of Baroda, Oriental Bank of Commerce, Central Bank of India and IDBI Bank.

If the plan goes ahead and these four PSBs are merged, the resulting bank will be second largest bank of India after State Bank of India with combined assets of Rs.16.58 crores.
Read: Merger of Public Sector Banks – Disadvantages for Bank Employees
Also Read: Why merger of public sector banks is not easy

Government had already indicated that it is interested in merging public sector banks to reduce the number of state run banks to around 6-8 and to have bigger and better banks.

BOB, IDBI, CBI and OBC, which are planned to be merged have reported combined loss of Rs.21,646 crores for the FY 2017-18.

According to reports, the merger of public sector banks will allow the weak banks to sell assets, reduce overheads and shut money-losing branches, the report said.

IDBI Bank Ltd, Oriental Bank of Commerce and Central Bank of India are already under the RBI’s Prompt Corrective Action (PCA) framework. Under PCA banks are barred from distributing dividends, remitting profits and disbursing fresh loans, restricted for expanding branch networks and need to maintain higher provisions.