Shares in United Bank of India gained for the second day in a row on hopes that there would be merger of the bank with one of its peers.

The shares of the bank had jumped substantially on Monday and there was follow-up buying in the stock today at the price of Rs 27 on the National Stock Exchange.

However, the roumours of a merger have been denied in the past and there maybe little credibility in the merger roumours.

The Mint Newspaper had quoted Banking Secretary Rajiv Takru in a phone interview saying that merger would not solve the banks problems. "Now I am monitoring lending and recovery operations of the bank on a daily basis," Takru told the Mint.

United Bank of India is saddled with huge amount of non performing assets (NPAs) and according to reports has been under-reporting NPAs in the sub Rs.10 lakh category, for many years.

Only recently, the Bank's Chairman and Managing Director quit the company, opting for a voluntary retirement.

Analysts say that a rally in the strong is purely speculative and the bank may take several quarters to recover from the huge non performing assets that it has.

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