Subsequent to the government’s suggestion for the State Bank of India to initiate a merger with its associate banks, the government has now made a similar suggestion to UCO Bank, Indian Overseas Bank and Bank of India. The main reason for this suggestion is the poor performance of these banks. The three banks – UCO Bank, IOB, and BOI – are expected to be merged with stronger lenders in order to improve their standing in the financial market. This new merger effort is expected to be further boosted by SBI’s merger with its associate banks as well as the currently separate entity, Bharatiya Mahila Bank.
Though the talks regarding this merger were initiated by the government, it has voiced intentions of keeping its involvement at a minimum by only acting as facilitator. The banks themselves are expected to come up with a viable merger solution to their current problems including those in the areas of human resources and technology. The government is expected to seek help from Banks Board Bureau (BBB) in order to ensure a smooth merger of UCO Bank, Indian Overseas Bank (IOB) and Indian Bank (IB) with other prospective lenders. UCO, IOB and IB reported losses of Rs. 1715.16 crores, Rs. 1,425 crores and Rs. 1,506 crores, respectively as per the most recently available data.