New Delhi, Feb. 19: The government is keen on a mega banking merger involving ailing development financial institution IFCI. However, the potential groom in this marriage appears to be reluctant.

North Block had asked the board of directors of state-run Punjab National Bank to consider taking over IFCI.

However, PNB does not wish to be forced into another mega-merger with the ailing yet asset-rich IFCI, which has on its books some Rs 15,920 crore in financial and physical assets.

To try and stall the merger, PNB, which took over the failed Kerala-based Nedungadi Bank some two years back, has been setting various conditions such as a debt write off before taking over the ailing financial corporation.

Top finance ministry officials said the conditions had made them realise that there was little chance of getting PNB to agree.

So, they have asked IDBI to prepare a roadmap for a possible merger between the two development financial institutions.

IDBI too has its own share of problems; it took over IDBI Bank some time back and needs some time to digest this mega merger.

However, the government?s diktat cannot be ignored and its board is currently working on its response to the takeover question.

North Block officials know that IFCI is not an attractive takeover target despite any tax sops the buyer may get from the merger.

Officials admit that though IFCI reported a Rs 61-crore operational profit last quarter, it still has huge problems, despite the Rs 6,000-crore bailout package sanctioned two years back.

IFCI had some Rs 3,230 crore in losses and nearly Rs 11,960 crore of gross non-performing assets at the end of financial year 2004.

To sweeten the deal, officials are now considering throwing in a small but profitable PSU bank to make the deal attractive.

If the deal sweetener is indeed thrown in, then perhaps even the reluctant PNB might consider merging with IFCI.

?The whole issue is that with these banks listed on bourses we have to ensure merger deals which do not erode shareholder value. The government can no longer transfer the job of reviving one of its sick children on to the shoulder of another stronger child. It has to look after the interests of other shareholders too,? officials said.