Public Sector Banks: How mergers and strategic sale appear to be a distinct possibility—सविस्तर माहितीसाठी इकॉनॉमिक टाइम्स मधील बातमी वाचावी.

Last week, the Reserve Bank of India said an 89-year-old lender, founded by the Devkaran Nanjee family of Mumbai, is unfit to conduct normal banking business, thanks to its financial position which is so precarious that it may collapse if allowed to continue.

The entity, Dena Bank, was the fourth public sector lender to attract RBI’s attention. Some months back, another 90-year-old lender which thrived even during the British period, Indian Overseas Bank, was diagnosed with a similar disease. IDBI BankBSE -1.56 %, which traces its history to a special act of Parliament, is gasping for breath, and so is Kolkata based UCO BankBSE -1.30 %.

Investors wonder whether a single shareholder—the government—can nurse all these entities back to health or throw in the towel. Is there a justification for one shareholder running so many loss-making lenders? Out of the 21 listed state-run banks, not more than four large ones have a future as rising bad loans and provisions have eroded the profitability of the rest, financial metrics provided by the regulator show.

At the end of the fourth quarter of the fiscal year ended March 2017, the collective losses for these lenders stood at Rs 10,000 crore, according to a Credit Suisse report dated May 23.

via Banking business: Public Sector Banks: How mergers and strategic sale appear to be a distinct possibility – The Economic Times