Mega Merger of , IDBI Bank & Oriental Bank - Latest News & Update!

In fresh news, the Government of is planning to integrate or merge 4 important & major like the Bank of Baroda, IDBI Bank, Oriental Bank of Commerce as well as the of India. Previously, few other banks have been merged. To know What is Bank Merger, why a lot of bank mergers are taking place these days, & their repercussions & advantages, this article is a must-read. This kind of information can be easily asked in various Banking & SSC Exams, so read this article carefully.

Bank Merger - An Introduction

• Since March 2017, the government has been desiring, to create 4-5 global sized lenders. In accordance with the same, the is now planning a merger of Bank of Baroda, IDBI Bank, Oriental Bank of Commerce and Central . • Previously, on April 1, 2017, the Government had merged with its 5 associate banks and . • The Five Associate Banks of SBI that were merged with it are:

1. State Bank of Bikaner & Jaipur, 2. , 3. , 4. 5. .

This merger had made SBI stand among top 50 banks in the world.

Newly Planned Bank Merger - Quick Points

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• Earlier, in his 2016 budget speech, finance minister Arun Jaitley had spoken about the government’s plans to reduce its stake in IDBI Bank to less than 50%. • In case, this bank-merging plan is acted upon, India's second-largest bank will be created (The first being State Bank of India). • This new bank will have a combined asset of Rs 16.58 trillion.

Reasons for Merging the Banks

• The newly proposed banks to be merged had a combined loss of Rs 21,646.38 crore in the fiscal year, 2017-18. • Due to this huge loss, the government has been looking for ways to overcome further losses, by allowing the weaker banks to sell off their assets, reduce overheads and close loss-making branches. • Another chief reason for merging the banks is to tackle the issue of mounting bad loans. • Bad loans refer to loans where corporate borrowers are not re-paying their dues to banks. • These bad loans are on the rise and their sum has crossed the mark of Rs 10 lakh crore including Rs 8.9 lakh crore share of government-owned banks. • One more reason is the reducing demand for fresh loans.

Major Points about the 4 Public Sector Banks -

Name of the Short Founding HQ MD/CEO Tagline Bank Form Year

Industrial Mahesh • Banking for All Development IDBI Kumar Jain • Aao Sochein 1964 Bank of India Bada

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• Bank Aisa Dost Jaisa

Oriental Bank of Mukesh Where Every Individual OBC Gurugram 1943 Commerce Kumar Jain is Committed

P.S. India’s International Bank of Baroda BOB Vadodara 1908 Jayakumar Bank

Central Bank of Central to You Since CBI Mumbai Rajeev Rishi 1911 India 1911

Section 44A of Banking Regulation Act 1949

Section 44A of the Banking Regulation Act, 1949 Lays Down the Norms for Voluntary Mergers.

Section 44A: Procedure for Amalgamation of Banking Companies

• No banking company under the force of any law, shall be amalgamated with another banking company, unless a scheme containing the terms of such amalgamation has been placed in draft before the shareholders of each of the banking companies concerned separately, and approved by a resolution passed by a two-thirds majority of the shareholders of each of the said companies.

Forced Mergers are Done under Section 45 of the Banking Regulation Act.

• The Reserve Bank can apply to the Central Government for an order of moratorium for a banking company. • The Central Government, after considering the application made by the Reserve Bank may make an order of moratorium staying the commencement or continuance of all

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actions and proceedings against the company for a fixed period of time on such terms and conditions as it finds proper and may from time to time extend the period on condition that the total period of moratorium shall not exceed six months.

What are the benefits of this Bank Merger?

• This newly planned Bank merger of Bank of Baroda, IDBI Bank, Oriental Bank of Commerce and will be able to rejuvenate the public banking sector which has been hit by severe losses in the 2017-18, fiscal year. • It will not only address the bad loans issue but also increase the demand for fresh loans.

So, these are the important details that you need to know about the Bank Mergers among important banks in India.

Previous PNB & Other Bank Mergers Banks and Headquarters – GK Notes in PDF Finance & Banking Abbreviations in PDF Understanding RBI Repo Rate and Interest Rate

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