The idea behind the merger is to have a strong PSU bank as the sponsor for these banks so that not only can their capital adequacy be increased but also their expansion can be fast-tracked.
Punjab National Bank (PNB) on Thursday said a clutch of regional rural banks (RRBs) are being amalgamated under it. Under the amalgamation scheme, Punjab Gramin Bank (PGB) will be amalgamated with Malwa Gramin Bank (MGB) and Sutluj Gramin Bank (SGB) of Punjab with effect from January 1, 2019. Meanwhile, a new entity called Dakshin Bihar Gramin Bank has been created under which Madhya Bihar Gramin Bank and Bihar Gramin Bank will be merged.
While Madhya Bihar Gramin Bank was already sponsored by PNB, Bihar Gramin Bank was sponsored by UCO Bank. PNB said in a statement, “Now, all these merged entities will be sponsored by Punjab National Bank. The idea behind the merger is to have a strong PSU bank as the sponsor for these banks so that not only can their capital adequacy be increased but also their expansion can be fast-tracked.
The government has identified rural lending as one of the key focus areas to alleviate rural stress.”
The amalgamated banks will remain under the sponsorship of PNB. The amalgamation has led to an increase in capital for Punjab Gramin Bank to `25.36 crore from `22.50 crore. Reserves will increase to `912.95 crore from `692.56 crore and networth will rise from `715.06 crore to `938.32 crore. The capital of Dakshin Bihar Gramin Bank will increase to `281.46 crore from `63.32 crore. Its reserves will increase to `621.43 crore from `542.96 crore, resulting in an increase in networth to `902.89 crore from `606.28 crore.