New Delhi, June 4: In a bid to rein in bad loans, the government is planning to merge at least four state-run banks, including Bank of Baroda, IDBI Bank Ltd, Oriental Bank of Commerce and Central Bank of India, reported Mint on Monday.
If the merger happens, the entity will become the second-largest bank in India after State Bank of India (SBI), with combined assets of Rs 1,658,000 crore, the report said.
The poor asset quality has crippled the lending ability of these banks, said the report.
With the merger of state-run banks, the government hopes to help stem the rise in bad loans in their books at a time when poor asset quality has crippled the lending ability of some of them. The merger will also allow the weak banks to sell assets, reduce overheads and shut money-losing branches.
Bank of Baroda, IDBI Bank Ltd, Oriental Bank of Commerce and Central Bank of India are under pressure with combined losses of Rs 21,646.38 crore in the year ended 31 March, said the report.
The finance ministry is also planning to sell a 51% stake sale in IDBI Bank to a strategic partner, for Rs 9,000-10,000 crore, the daily said.