The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2020 Euromoney, a part of the Euromoney Institutional Investor PLC.
Opinion

India banking: The power of the micro

The problem with India’s state bank mergers.

Bank-of-Baroda-logo-R-780

Bank of Baroda



September brought a sign of progress in India’s ambitions to transform its debt-addled state-owned banking sector. We are a long way from the endgame of six state banks prime minister Narendra Modi once mentioned – there are still more than 20 of them in fact – but the recommended merger of Bank of Baroda, Vijaya Bank and Dena Bank is at least a step in the right direction.

This is what the market wanted: fewer banks, resolving bad loans through the new bankruptcy court process, recapitalized and ready to start lending again. But there is one nagging doubt about the whole process. A culture is emerging where the dismal are rewarded and the able are impeded.

Acquisition

Although the recommendation, from a panel chaired by finance minister Arun Jaitley, is billed as a three-sided merger, what is really happening here is that Bank of Baroda is acquiring the other two.




Take out a complimentary trial

Take out a 7 day trial to gain unlimited access to Euromoney.com and Asiamoney.com analysis and receive expertly-curated updates direct to your inbox.

 

Already a user?

Login now

 

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree