You are here: Home » Finance » News » Banks
Business Standard

PNB could take control of OBC, Andhra Bank, Allahabad Bank: Reports

The govt has been trying to merge smaller regional state-run banks with better managed larger government-owned lenders as one way to reduce bad loans that stand at more than Rs 9 trn

Aftab Ahmed | Reuters  |  New Delhi 

Punjab National bank, PNB
Punjab National Bank

(PNB) could take control of two or three small state-run banks, that could include Oriental Bank of Commerce, and Allahabad Bank, two sources familiar with the situation told Reuters.

New Delhi has been trying to merge smaller regional state-run with better managed larger government-owned lenders as one way to reduce bad loans that stand at more than Rs 9 trillion ($130 billion), or nearly 5 per cent of the nation’s gross domestic output.

Last year, the government engineered state-owned Life Insurance Corporation’s takeover of IDBI Bank, a step to ensure that the bank with one of the highest levels of bad loans on its books is well capitalised.

could start the process of taking control of the in the next three months, according to the sources, who declined to be named, as they are not authorised to speak to the media. shares fell as much as 4 per cent following news of the possible development. Its shares ended down 2.55 per cent at Rs 86.10 on on Tuesday.

fell 2.6 per cent to close at Rs 45.15 a share, while ended down nearly 1 per cent at Rs 95.20 per share. The move is seen as an attempt by the central government to consolidate the nation’s debt-burdened state banking sector. declined to comment, while the other did not immediately reply to an email from Reuters seeking further information. India’s ministry also declined to comment.

Chart

First Published: Tue, May 21 2019. 17:25 IST
RECOMMENDED FOR YOU