The Narendra Modi government will merge Indian Bank with Allahabad Bank as part of its larger plan to merge 10 public sector banks into four, bringing down the number of state-owned lenders to 12 from 21.
The Acquirer
Indian Bank
Indian Bank, which has long been touted as one of the best-performing public sector banks, will merge with Allahabad Bank. The combined entity will have an advances base of Rs 3.51 lakh crore and a deposit base of Rs 4.56 lakh crore.
Indian Bank had a bad loan ratio of 7.33 percent. Its capital adequacy ratio at the end of the first quarter was at 13.62 percent. Indian Bank will receive Rs 2,500 crore worth capital from the government to complete the merger.
Bank Being Acquired
Allahabad Bank
Allahabad Bank, which is focused in the eastern part of the country, has been a trouble spot for some time. Apart from governance concerns that had emerged under its former chief executive, the bank has a relatively higher gross NPA ratio of 17.43 percent.
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