On Wednesday, 10 public sector banks (PSBs) submitted the scheme of amalgamation, which came back with a nod of approval from the Union Cabinet. These 10 public sector banks will be merged into 4 entities. The aim of this decision being on the grounds of fewer but stronger lenders in India.
According to finance minister Nirmala Sitharaman, these 10 bank’s submission has been approved by the cabinet, keeping the bank services intact to avoid any hassle for account holders. From 1st April onwards, the merger is stated to come into effect. The consolidation of 10 PSBs was first announced by the finance ministry in August.
Statistics show that in 2017 India had 27 official public sector banks (PSBs). However, the number gradually dropped within 3 years, sticking at 18 PSBs in recent times. This merger will further change the tally to only 12 public sector banks (PSBs) in India.
The 10 banks approved for the merger are Punjab National Bank (PNB), Oriental Bank of Commerce (OBC), United Bank, Canara Bank, Syndicate Bank, Union Bank of India, Andhra Bank, Corporation Bank, Indian Bank, and Allahabad Bank.
The State Bank Of India (SBI) is the largest public sector bank currently, and the merger between Punjab National Bank (PNB), Oriental Bank of Commerce (OBC), and the United Bank is slated to form the second-largest public sector bank (PSBs).
Another merger will take place between Canara Bank and Syndicate Bank, which is supposed to become the fourth-largest public sector lender of India.
India’s fifth-largest private sector lender is stated to be formed from the merger between Union Bank of India, Corporation Bank, and Andhra Bank.
Last, but not the least, the merger between Indian Bank and Allahabad Bank will create India’s seventh-largest PSB lender.
The third-largest spot is acquired by Bank of Baroda (BOB), as a result of the 2019 merger between Bank of Baroda (BOB), Dena Bank and Vijaya Bank.
This merger has been well thought of and was only approved after thoroughly studying last year’s merger of Bank Of Baroda, which witnessed retail loan sanction time reducing to 11 days from the previous tally of 23 days. Additionally, the merger also witnessed an increase in operating profit by 11.4%.
The largest PSB, State Bank of India (SBI) merged with 5 associated banks along with Bharatiya Mahila Bank to arrive at the position it currently holds. Information and broadcasting minister Prakash Javadekar have stated that, in the current financial year alone, the government has infused in these banks about ₹40,000 crores.