With the government signalling to a bigger bank in the next round of consolidation, Canara Bank may take over smaller lenders Vijaya Bank and Dena Bank. "Discussions are on between banks. There is a possibility that first Vijaya and Dena merge, before being taken over by Canara Bank,” a senior government official told ET.
Canara Bank comes fourth in market capitalization after SBI, Bank of Baroda and Punjab National Bank. The proposal is supposed to be pushed after monsoon session of the parliament.
"It is going to be a politically active session with the GST (goods and services tax) rollout and the presidential election. Besides, it will also give time for banks to work out the possible issues that may arise,” the official told the ET.
"There have to be at least three banks of the size of the country's largest lender SBI. And then we can have mid-sized banks and a few specialised banks catering to particular sectors,” the officer added.
Apart from this, banks like Indian Bank, Indian Overseas Bank and Syndicate Bank would also be looking for consolidation among themselves. Most banks have been asked to consolidate to become bigger lenders. Dena Bank is among the five public sector bank that the RBI has restricted sanction of fresh loans and dividend distribution. The other four are IDBI, Bank of Maharashtra, Central Bank of India and Uco Bank. Dena Bank posted a loss of Rs 575.26 crore for the March quarter while Vijaya Bank reported a profit of Rs 204 crore for the same period. Canara Bank is among the top five banks in the country with a network of around 7,000 branches.
