Dena bank, Andhra Bank and Corporation banks are the favourite acquisition targets among leading public sector banks.

The finance ministry officials that met chiefs of leading public sector banks said that consolidation was essential for the economy in order improve on the GDP.

Sources from banking industry said that that Union bank of India, Bank of Baroda and Punjab National Bank were keen on acquiring Corporation Bank while Canara Bank and PNB were interested in acquiring Dena Bank.

Bank of India has also shown interest in Oriental bank of Commerce.

Bankers say that the consolidation talks would take long to materialise since they were in preliminary stages. Sources say that the finance Ministry officials are expected to meet CEOs of small and medium sized public sector banks to know their views on consolidation.

The large banks did not show any inclination in buying banks located on the eastern belt due to fear of resistance from the political front and labour issues. Some of the banks situated in the eastern belt include UCO bank and Allahabad bank.

The large banks did not show any interest in acquiring banks like Bank Of Maharashtra, Central Bank of India and Punjab & Sind bank largely due to union problems faced by the banks.

Sources say that this time, large banks are looking to acquire smaller banks that have clean balance sheets and give them a wider geographical reach.