Geographical, other synergies important for consolidation: BoB

Public sector Bank of Baroda was looking for a complementary network, geographical and other synergies in mergers with smaller state-owned banks, said its Chairman and Managing Director MD Mallya on the sidelines of a banking conference here on Wednesday.

“However, there are no specifics to share on the merger issue yet. We will look at it and if there is a strong case for merger, we will definitely explore it,” he added.

Last week, the finance ministry called five large nationalised banks for discussions on consolidation in the sector. The ministry is also expected to schedule a meeting of smaller state-owned banks to discuss the issue.

Mallya said it was too early to comment on whether the 18 per cent credit growth target for 2009-10 (April-March), set by RBI, would be achieved.

“The sentiment for credit offtake remains positive in FY10. Credit growth is picking up, but remains muted,” he said.

He expects interest rates to remain stable due to ample liquidity in the system.

He said lending for home loans and to small and medium enterprises were seeing a good pick up, but loans to companies and new projects still remained weak.

“The pipeline for sanctioned loans is substantial, and we expect disbursals to rise soon. Due to a robust pipeline, there is substantial scope for credit growth in Q3 (October-December) and Q4 (January-March),” Mallya said.

He expects companies to gradually approach banks for funds after tapping other sources first. In another development, the bank has received New Zealand regulatory approval for setting up a branch in that country, said Mallya.

“We have received all necessary licences and will launch operations in New Zealand through a subsidiary in January,” he said.