PNB to take control of 3 banks |
Indian banking sector has been on a road to recovery for some time now and with strong government support, it surely is on the right path. The government has been trying to merge smaller regional state-run banks with better managed larger government-owned lenders as one way to reduce bad loans that stand at more than $130 billion, or nearly 5 percent of the nation`s gross domestic output. Last year, the government engineered state-owned Life Insurance Corporation`s takeover of IDBI Bank, a step to ensure that the bank with one of the highest levels of bad loans on its books is well capitalised. PNB could start the process of taking control of the banks in the next three months. PNB shares fell as much as 4 per cent following news of the possible development. Its shares ended down 2.55 per cent at 86.10 rupees on National Stock Exchange on Tuesday. Allahabad Bank fell 2.6 per cent to close at 45.15 rupees a share, while Oriental Bank of Commerce ended down nearly 1 per cent at 95.20 rupees per share. The move is seen as an attempt by the central government to consolidate the nation`s debt-burdened state banking sector.
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