PNB to merge RRBs in 3 states

Punjab National Bank (PNB) has initialised efforts to merge its regional rural banks (RRBs) in Haryana, Punjab and Uttar Pradesh to gain more business volumes and reduce costs.

S S Kohli, chairman & managing director, said, "We will merge three RRBs in Haryana and Punjab to form one unit each in the two states and a similar exercise would be carried out in Uttar Pradesh."

He was speaking to reporters at a press conference held to promote the bank's second public issue. PNB has a total of 19 RRBs and 1,200 branches which it intends to bring down to 13.

Meanwhile other banks such as State Bank of India, Bank of Baroda, Central Bank of India, Bank of India, Canara Bank, Sundicate Bank and Allahabad Bank are readying to merge their RRBs on a statewise basis.

State Bank of India has 30 RRBs, Bank of Baroda 19 and Central Bank of India 23.

The consolidation would help the bank cut costs, increase mobility for staff and gain advantage of size to garner higher business volumes, Kohli said.

Consolidation among RRBs has gained momentum as the government has made its stand clear that it is in favour of amalgamation of sponsor bank and its RRBs.

In the second phase of consolidation, four RRBs in Bihar and three banks in Uttar Pradesh would be merged into one unit each, Kohli said. PNB has already contacted the central and state governments in order to take the merger process forward.

The central government has majority control in RRBs at 50 per cent, state government at 15 per cent and sponsor (commercial) bank at 35 per cent.

Of PNB's 19 RRBs, two have carry forward losses amounting to Rs 84 crore. The first request from the state governments has been there be no voluntary retirement scheme for the RRB staff, he said.