No Plan Of Merger

 No definite plans for merger of PSU banks: Banking Secy Sandhu said the merger between the ailing United Bank of India and IDBI Bank was a suggestion, and that United Bank could be a candidate for merger with any other PSU bank as well.-Money Control



The government does not have any definite plans for merging PSU banks, Banking Secretary Gurdial Singh Sandhu said Friday. In an interview with CNBC-TV18’s Latha Venkatesh and Sonia Shenoy, he said guidelines on autonomy to PSU banks would be issued in a month.

Sandhu said the merger between the ailing United Bank of India and IDBI Bank was a suggestion, and that United Bank could be a candidate for merger with any other PSU bank as well.

SBI Capital Markets has been asked to prepare a feasibility report for the merger, he said. Sandhu said the government was not planning to brings banks under the Companies Act as recommended by the PJ Nayak Committee on governance norms for PSU banks. The government is likely to focus more on villages as part of its plan to improve financial inclusion.

　

Below is the transcript of GS Sandhu's interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18.

Latha: When you last spoke with us, you spoke about autonomy for public sector banks and you said, you are already seriously thinking about improving the independent quality of the directors on public sector boards, any progress on that or any more signs of autonomy?

A: Yes. This is something which we are working on and hopefully within the next one month or so, we should be able to come up with some new guidelines on this. So it will take some time.

Sonia: Can you tell us what the plan is as far as the IDBI-United Bank merger is concerned? There are so many reports doing the rounds, if you can clarify to us - not just the IDBI-United Bank merger plans but also what are the other banks that could be in for a merger?

A: There are no definitive plans as yet as regards mergers or consolidations. These are some of the suggestions that have been coming to us and there is no plan as such. We have recently asked SBI Cap to look at these issues and examine them in terms of the feasibility, in terms of their synergy etc and put up a feasible plan to us. So they will take some time and thereafter we can work on that.

Latha: Just to clarify only on the IDBI-United Bank issue, United is of course badgered with more bad loans than any other bank as well you have not yet appointed a chairman. So should we assume that clearly for United the future is to merge into some big bank?

A: I cannot say anything definitive on this but based on the feasibility etc, that could be a candidate. It is very difficult to say at this stage whether it will happen. These are just discussions, which are taking place.

Latha: Is IDBI likely to be the buyer in that case?

A: The issue with them is that they don’t have too many branches and for a bank to succeed, it should have a large number of branches spread out in the country. They don’t have that number. So they are looking at some partner or something of this sort where they can have more branches. Let us see, there is a need to expand IDBI in terms of the branch network.

Sonia: Although there are no definite plans at this point in time in the feasibility report, what are the other banks that are under consideration for a merger?

A: No, there is no feasibility plan at the moment. We have only asked SBI Cap to prepare a feasibility plan. There have been various suggestions over the past few years, people have been talking of A bank with B bank, B bank with C bank. But there has been no detailed study on this in terms of the technological synergy or manpower etc. So we will look at that once we get a proper report of that.

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