India to announce a mega merger among state-run banks

India will announce a plan for a mega merger among some state-run banks, a government official said Friday.

Finance Minister Nirmala Sitharaman will hold a press conference at 4 p.m. on the proposal, the official told reporters in New Delhi, asking not to be named citing rules.

Prime Minister Narendra Modi's government is keen to bolster banks to lend more to boost a sagging economy and create more jobs after unemployment surged to a 45-year high.

Indian banks are saddled with record soured debt of about $130 billion, much of it on the books of state-run banks, eroding their capital buffers due to the need to set aside money for bad loan provisions. More recently, a shadow banking crisis is threatening to add to the pile of stressed debt.

Last year, government helped facilitate a merger of Dena Bank and Vijaya Bank with Bank of Baroda, creating the third-largest bank by loans in the country.