Financial Daily from THE HINDU group of publications
Saturday, Feb 21, 2004

Cross Currency

Group Sites

Home Page - Mergers & Acquisitions
Money & Banking - Financial Institutions

`IFCI merger with PNB may miss deadline'

Sarbajeet K. Sen

New Delhi , Feb. 20

THE merger of IFCI with Punjab National Bank (PNB) is heading for time overrun. With several legal intricacies waiting to be sorted out right from the initiation till the completion of the process, the Ministry of Finance now feels that the April 1 deadline set by the Government earlier is likely to be exceeded by at least a couple of months.

Barely three weeks into drawing a roadmap for taking the process forward, officials are resigned to the fact that that a complete merger of the two entities could come about earliest by June or July this year.

The boards of PNB and IFCI had approved the merger on January 30.

Senior officials said the feeling that the deadline would be overstepped stems from the fact that a good amount of time might be required to obtain the approval of the High Court for the proposed merger.

In fact, there have been some hiccups in the initial stage itself with clarity still to emerge on the modalities to be followed for initiating the merger process on the ground. The merger is due to be completed under the Companies Act.

"We are awaiting legal opinion on whether a notification would have to be issued by the Government under the Companies Act to facilitate a merger between a bank and a financial institution," top officials of the Finance Ministry said.

PNB officials, who are also seeking legal help to unravel the route to the merger, said that initial legal feedback suggests that the Government might have to consider issuing a notification under Section 396 of the Companies Act to set the process rolling.

The section provides powers to the Central Government to issue notification for amalgamation of companies in national interest.

Finance Ministry officials, however, said that all efforts are being made from the Government's side to be ready with the basic framework for the scheme for the merger within the April 1 deadline announced by the Finance Minister, Mr Jaswant Singh.

"We want to complete the work from our side by April 1. There would be some time needed to get the approval from the High Court once the scheme is finalised and approved by the shareholders. Since both institutions are headquartered in the Capital we would need the approval of only one high court. There would be some time saved on account of this," officials said.

More Stories on : Mergers & Acquisitions | Financial Institutions | Public Sector Banks

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Pvt airlines allowed to fly to Colombo — UAE carrier to operate flights from Abu Dhabi

Rural wealth yet to be tapped, says Jaswant
Cabinet clears DA merger proposal for Govt staff
BSES told to stop offering rebates
IPCL issue oversubscribed on opening day
ITES jobs to grow 45 pc: Nasscom
FIIs can issue PNs to entities supervised by regulatory bodies
`IFCI merger with PNB may miss deadline'
Ford plans `religious tourism project' in Bengal — Vedic planetarium in Mayapur on cards

The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |

Copyright 2004, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line