It's banks' decision on M&A, says FM

It's banks' decision on M&A, says FM

Centre says it is only a facilitator of the move

It's banks' decision on M&A, says FM

Mukherjee told the Lok Sabha that the current policy of the government had left it to the bank-managements to take initiative for consolidation. He said the government could only play “a supportive role as the common shareholder.”

Finance Minister’s clarification came close on the heels of the government giving its nod to the State Bank of India (SBI) to acquire its subsidiary, State Bank of Indore.
Mukherjee was replying to a calling attention motion moved by the Communist Party of India (CPI) MP Gurudas Dasgupta regarding discontent amongst the bank employees due to merger by the public sector banks.

“No directive on consolidation is being issued by the Government and RBI. The boards of the banks thus have to take a decision in this regard based on the synergy levels of merging or consolidating entities,” said Mukherjee.

Dasgupta sought to know if the Government had taken any initiative “overtly or covertly” to merge various public sector banks resulting in “discontent” amongst the bank employees. SBI, has already acquired State Bank of Saurashtra and recently got government’s approval to do the same with State Bank of Indore.  The SBI also apparently has plans to take over all its associate lenders eventually.

State Bank of Indore informed the Bombay Stock Exchange on October 31 last that its board had approved the proposed acquisition of the bank by the SBI. It proposed allotment of 34 equity shares of the SBI in lieu of its every 100 equity shares.

Mukherjee said the government would keep in view the interests of all stakeholders, including owners, shareholders, employees and customers, while examining merger proposals from the public sector banks. Mukherjee said that the government was trying to ensure that suitable clauses were incorporated in the scheme of amalgamation and acquisition, so that the pay and allowances or the compensation to employees of the merging entities were not altered to their disadvantage.