- As per the latest merger- Oriental Bank of Commerce (OBC) and United Bank of India (UBI) will be merged with Punjab National Bank (PNB). The merged entity will become the second-largest state-run bank. The new entity will have a business of Rs 17.95 lakh crore and 11,437 branches. The PNB will become second largest after the State Bank of India (SBI)
- The amalgamation of Syndicate Bank into Canara Bank will create the fourth-largest public sector bank with Rs 15.20 lakh crore business and a network of 10,324 branches.
- Merger of Union Bank of India, Andhra Bank and Corporation Bank will create India’s fifth largest PSB with Rs 14.6 lakh crore business and fourth largest branch network.
- Allahabad Bank branches will operate as those of the Indian Bank. The merger of Allahabad Bank with the Indian Bank will create the seventh-largest public sector bank with Rs 8.08 lakh crore business.
- With this mega-bank mergers, the number of PSBs will get consolidated from 27 banks in 2017 to 12 banks in 2020.
- Six Merged Banks – SBI, Bank of Baroda, Punjab National Bank, Canara Bank, Union Bank of India, Indian Bank.
- Six Independent Banks – Indian Overseas Bank, UCO Bank, Bank of Maharashtra, Punjab and Sind Bank, Bank of India, Central Bank of India.
- Last year, Dena Bank and Vijaya Bank were merged with Bank of Baroda. Prior to this, the government had merged five associate banks of SBI and Bharatiya Mahila Bank with the public sector bank. These were State Bank of Patiala, State Bank of Bikaner and Jaipur, State Bank of Mysore, State Bank of Travancore and State Bank of Hyderabad effective April 2017.
Earlier this month the cabinet gave its approval for the mergers that will consolidate operations of 10 public sector banks (PSBs) into four ‘mega banks’. There were as many as 27 public sector banks (PSBs) in 2017. The total number of public sector banks in the country will come down from 18 to 12 in the new financial year.
Impact of PSU Bank Mergers
The merger of PSU banks has its share of merits and demerits. The addition of staff and network is the effect that can be easily gauged from the impending merger move. What else can emerge due to the merger? Don’t know? Take a look below.
Merits of Merger
- A large capital base would help the acquirer banks to offer a large loan amount
- Service delivery can get improved
- Recapitalization need from the government to reduce
- Customers will have a wide array of products like mutual funds and insurance to choose from, in additional to the traditional loans and deposits
- Technological up gradation on the cards.
Demerits of Merger
- It would be tough to manage issues pertaining to human resource
- Few large inter-linked banks can expose the broader economy to enhanced financial risks
- The local identity of small banks won’t be that prominent