Indian state-owned lender Punjab National Bank (PNB) may take over two to three smaller PSU lenders as the country gears up for the next round of consolidation in banking sector.
According to a Reuters report, Oriental Bank Of Commerce, Andhra Bank and Allahabad Bank may be merged into PNB.
The proposal may be advanced by the new government with general election results set to be declared this week.
Sources told the news agency that PNB may start assuming control of the banks in the following months after government nod.
However, PNB and other associated banks declined to comment on the report.
The PNB merger is aligned with India’s larger programme to consolidate the banking industry struggling with growing NPAs.
Recently, two state-owned lenders Dena Bank and Vijaya Bank were merged with Bank of Baroda.
Additionally, six State Bank of India (SBI) subsidiaries were merged with the parent company last year. Even state-run insurer LIC acquired struggling lender IDBI Bank.
Even after these consolidations, India has around 20 state-owned banks.
The government has also injected around $36bn in the banks as a part of its programme to revive the sector.
After the report of potential PNB merger surfaced, the share prices of all the associated lenders dropped significantly.
It may be noted that PNB has been the victim of the largest banking scandal in India losing around $2bn in frauds last year.