Dena Bank’s share price rallied nearly 15 percent intraday Wednesday, 14th June 2017 on buzz of it merging with a stronger state-run lender.
A government official said the Centre was aiming to merge the bank with stronger PSU lender, according to CNBC-TV18 reports quoting NewsRise.
Bank of Baroda and Canara Bank are top two contenders to absorb smaller state-run banks, the official said, adding that Punjab National Bank and Bank of India’s balance sheets are too weak at the moment to absorb other lenders.
Consolidation of not only banks but also other PSUs has been on government’s radar. Last year, the five associate banks and Bharatiya Mahila Bank merged with the country’s largest lender State Bank of India.
According to reports, UCO Bank, Oriental Bank of Commerce and United Bank are also expected to be considered by the government for merger with big PSU lenders.
The Finance Ministry has been considering the creation of five-six big banks in India, so that these big lenders can be able to tackle NPA problems.
Gross non-performing assets at the end of December 2016 increased to more than Rs 6 lakh crore from Rs 5 lakh crore in December 2017; majority of which are from steel, power and other infrastructure sectors.
Finance Minister Arun Jaitley has on several occasions said India needs 5-6 banks of global size and scale and further consolidation in the banking sector will be done at the appropriate time.