#CCI probes #RRBs merger promoted by #Syndicate #Bank, #PNB for possible breach of norms Competitio n Commissio n of Indiais investigating a merger between regional rural banks(RRBs) sponsored by Punjab National Bankand Syndicate Bankfor possible breach of norms. There are allegations that the finance ministry forced the merger due to political pressure, a senior CCIofficial said, but added, We are, however, examining this case in regard to violation of amalgamation and financial prudence. The case is being examined under the combination provision of the Competition Act 2002, the official said, requesting anonymity. We may also look at other RRB mergers wherever necessary permission hasnt been taken, the official said. In 2013, the finance ministry had given its go-ahead to merge Gurgaon Gramin Bank (GGB), sponsored by Syndicate Bank into Haryana Gramin Bank, sponsored by PNBand create Sarva Haryana Gramin Bank. The move was, however, questioned by the Comptroller and Auditor General of India on the grounds that GGB was financially stronger than Haryana Gramin Bank.It was the state government which had recommended that GGB should merge into Haryana GB with PNB as the lead bank, said another official. In a response to the queries raised by the auditor, the regulator for RRBs, National Bank for Agriculture and Rural Development (NABARD) had told the finance ministry that there have been instances where financially stronger banks have been merged with weaker banks. We had informed the ministry that branch network is taken into consideration for deciding on amalgamation, said a NABARD official, who did not wish to be identified.A senior PNB official, however, said that since the other sponsoring bank, Syndicate Bank had given a no objection, they did not see any issue with the merger. The government has been aggressively pursuing the merger of RRBs, whose number came down as a result to 57 in March 2014 from 82 in 2011. It is also expected to introduce in the ongoing winter session of Parliament the Regional Rural Banks (Amendment) Bill, which seeks to allow RRBsto raise capital from sources other than the central government, state government or the sponsor bank. RRBs have a network of over 18,000 branches and are promoted jointly by the Centre, a sponsoring bank and the state government concerned. The Centre holds 50% stake in each RRB, while the sponsoring bank has 35% and the balance 15% is held by the state government. Almost all RRBs are profitable and the total profit of RRBs functioning in the country till March 2014 was Rs 2,832.29 crore.
Posted on: Sat, 29 Nov 2014 10:37:49 +0000
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