India: Gov tells banks to discuss ways to merge at board level

The Finance Ministry of India, just days after the Union Cabinet approved a framework to oversee proposals for the merger of banks, has written to the state-owned banks asking them to start looking at the possibility of consolidation, including discussions at the board level, according to a report by The Indian Express. The news was confirmed by the senior bankers who said that most banks were yet to even start the process of identifying potential lenders with whom a merger could be considered based on geographical reach, branch network or franchise, loan portfolio, deposit spread, and other synergies.

This decision has come in the backdrop of rising bad loans that have underlined a growing need for huge capital infusion. In fact on Saturday, September 16, the bankers said that they are betting on the Insolvency and Bankruptcy Code and the process of National Company Law Tribunal for getting quick resolutions in order to solve the problems of bad loans, according to a report by Indo-Asian News Service.

“The Insolvency and Bankruptcy Code, 2016 is a game-changer,” State Bank of India’s Managing Director (National Banking Group), Rajnish Kumar said, adding that it will greatly increase the pace of resolution of stressed assets.

Full Content: Indian Express

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