The Ministry of Corporate Affairs, Government of India (MCA), has through a notification published on August 30th, 2017, exempt reconstitution, transfer of whole or any part thereof and amalgamation of nationalised banks under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980, from merger control scrutiny for a period of 10 years (Notification).
In the past, the MCA has also exempt combinations relating to a banking company against which an order of moratorium has been passed[1] as well as for amalgamation of Regional Rural Banks[2].
In the last few months, there have media reports regarding consolidation of Indian public sector banks. The Government of India has been considering such consolidation to strengthen the financial position of nationalised banks and thereby enable them to effectively compete with foreign banks. Given that the Notification exempts only nationalised banks and the merger process would have adequate checks and balances involving the government and the central bank, it seems only appropriate to do away the requirement of an additional regulatory approval.
[1] Notification No. S.O. 93(E) dated 8 January 2013
[2] Notification No. S. O. 2561 (E) dated 10 August 2017
* The authors were assisted by Aishwarya Gopalakrishnan, Senior Associate