No concern to asset quality post UBI, OBC merger: PNB CEO

New Delhi: The Punjab National Bank (PNB), which is the anchor bank for a scheduled merger with the United Bank of India (UBI) and the Oriental Bank of Commerce (OBC), has said that it does not see any erosion in asset quality after the merger and the best HR, process and products will be chosen for the consolidated entity to offer a win-win situation for the combined staff and customers of these three banks.

"Everything relating to the merger is going on smoothly. We don't foresee any challenges. Other banks have done it successfully and we can repeat that. The asset quality of PNB and the merging banks will not at all suffer rather it will strengthen as they will have a collective bargaining and negotiating power with the defaulters," Sunil Mehta, the Managing Director and CEO of PNB told IANS.

"In terms of roadmaps, we have already created inter-bank committees which are interacting with each other on the best processes, products and systems to be adopted for each bank and the best will selected for a win-win situation for the customer. Similarly the best practices among the HR will be adopted for the staff."

The merged entity will be operational from April 2020.

Under the consolidation, the three banks will be merged into one entity to make the second-largest PSB with a business of Rs 17.95 lakh crore and 11,437 branches.

The three banks recently got a capital infusion of Rs 16,000 crore.

The OBC was earlier a Prompt Corrective Action (PCA) bank under the Reserve Bank of India (RBI) with lending, management compensation and directors' fees and branch expansion restrictions. But in February this year, it was out of the PCA.

The respective boards of the three banks have given in-principle approval for the amalgamation.

The UBI's Board of Directors has approved in-principle a plan to raise upto Rs 3,000 crore via a preferential sales of shares. The UBI, currently under PCA, will come out of the framework because of bank merger.

On September 19, Finance Minister Nirmala Sitharaman met the heads of the public sector banks where the issue on the preparation of merging banks to meet the April 2020 deadline was discussed, along with credit offtake in retail, and home and personal loans.

The government last month announced the merger of 10 public sector banks into four strong lenders with countrywide networks and global reach to boost credit and revive economic growth in the nation's bid to become a $5 trillion economy in the next five years.

After this, the total number of public sector banks will come down from 24 to 12.