The Hindu Business Line : `Corporatisation key to merger of public sector banks'

THE Indian Banks Association is of the view that `corporatisation' of public sector banks may be the key to facilitating the merger between PSU banks in the future.

Since public sector banks are governed by the `Bank Nationalisation Act' and the `Banking Regulation Act,' it would be necessary to corporatise them and get them registered under the `Companies Act,' according to an IBA source.

Alternatively, any amalgamation plan between two public sector banks would require Parliamentary approval and this might lead to long delays, he said.

In the case of private sector banks, amalgamations have been relatively easier as they are governed by the `Companies Act.' Here the decision to merge is taken by shareholders with the approval of the Reserve Bank of India, and the process is relatively quicker, according to sources.

The recent corporatisation of IDBI and other public sector entities like HPCL and BPCL has influenced opinion in banking circles, in favour of corporatisation as being a viable solution.

Mr H.N. Sinor, CEO, IBA, admitted that both the possibilities are under serious consideration and will be taken up for further debate by the association's committee on consolidations shortly.

The committee is then expected to submit its recommendations to the Government.

If the Government agrees to corporatise the public sector banks, then the Bank Nationalisation Act will have to be repealed, according to legal experts.

More Stories on : Mergers & Acquisitions | Public Sector Banks

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

Stories in this Section
Aviva sale may open up Japan market for Wipro

Public sector insurers against splitting motor cover risks

Cholamandalam MS targets SMEs to drive volumes

Banks asked to review computation of liabilities

Bond prices surge; rupee firming up

`Corporatisation key to merger of public sector banks'

Bank mergers a pipedream

`New norms on bank ownership will help mergers, consolidation'

Dena Bank plans second public issue in Q3

RBI in quality drive; to go for ISO 9000

Bank deposit insurance scheme to be reviewed