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Banks in dull phase to join with flourishing counterparts
Posted on: 25/May/2016 2:12:26 PM
Owing to surge in bad debts with public sector banks, there are plans to combine well doing banks with those that are languishing. In his note about this, Vinoth Rai, Comptroller and Auditor General of India said that the centre is ready to invest more than what was decided earlier.
Furthermore, 27 of the existing public sector banks will now be converted as 6 larger public sector banks. Languishing banks will receive get funded by the central government before combining with larger banks. At the same time, well doing banks need to think of combining with smaller banks.
The center has plans to invest Rs 25,000 crore in public sector banks in the present financial year. This however is not the final amount; if needed in excess, furthermore funding will be granted.
There are plans for State Bank of India and all its associate banks to get combined with Bhariya Mahila Bank. More such joining is expected. There is no deadline for this, however. We need to consider such joining of banks.
Shares of these public sector banks are being sold at price lesser than its book value. These valuations are very attractive.
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