The Big Picture - Bank Mergers: Need & Implications

State-owned Bank of Baroda, Vijaya Bank and Dena Bank will be merged to create the country’s third largest lender as part of efforts to revive credit and economic growth. The move follows top lender State Bank of India last year merging with itself five of its subsidiary banks and taking over Bharatiya Mahila Bank, a niche state-run lender for women. Announcing the plan on Monday, Finance Minister Arun Jaitley said the merger will make the banks stronger and sustainable as well as increase their lending ability. Giving the context of the merger, he said bank lending was becoming weak, hurting corporate sector investments. The government owns majority stakes in 21 lenders, which account for more than two-thirds of banking assets in the Asia’s third biggest economy. But these PSU banks also account for the lion’s share of bad loans or NPAs plaguing the sector and need crores of rupees in new capital in the next two years to meet global Basel III capital norms. On this edition of ‘The Big Picture’ we take a closer look at mega banks, their need and implications. Anchor: Frank Rausan Pereira Guests: Nitin Desai, Former Chief Economic Advisor, Government of India. Ajay Dua, Former Secretary, Ministry of Commerce & Industry. A. K. Bhattacharya, Editorial Director, Business Standard.