New Delhi, April 1, 2020:
Ten Public Sector Undertaking (PSU) banks will be merged into four banks from Wednesday, April 1 in the biggest consolidation exercise in the banking space,
The Government of India had announced about the plan in August 2019. According to the plan, the branches of the merging banks will operate as branches of the banks in which they have been merged.
The customers of the merging banks will also now be treated as customers of the banks in which these banks have been merged.
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As per the merger, the Oriental Bank of Commerce (OBC) and United Bank of India (UBI) will be merged with one – Punjab National Bank (PNB), which in turn, will become the second-largest state-run bank. This new entity is expected to have a business of Rs 17.95 lakh crore and 11,437 branches.
Syndicate and Canara banks will be merged into one, thereby creating the fourth-largest public sector bank with Rs 15.20 lakh crore business and 10,324 branches.
The branches of Allahabad Bank will function as those of the Indian Bank. This merger will create the seventh-largest public sector bank with Rs 8.08 lakh crore business.
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Union Bank of India will have the branches of Andhra and Corporation banks and this new entity will create India’s fifth-largest public sector bank with Rs 14.59 lakh crore business and 9,609 branches.
According to the government, the merger of the ten banks will lead to the creation of stronger establishments and with these mega-bank mergers, the number of PSBs will get consolidated from 27 banks in 2017 to 12 banks in 2020.
The new 12 public sector banks will be — six merged banks and six independent banks. State Bank of India, Bank of Baroda Punjab National Bank, Canara Bank, Union Bank of India, Indian Bank will be the six merged banks. And, Indian Overseas Bank, UCO Bank, Bank of Maharashtra and Punjab and Sind Bank, which have a strong regional focus, will remain independent entities.
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In the past, various other bank mergers have taken place. For instance, in 2017, the country’s largest public lender – the State Bank of India took over five of its associates and Bharatiya Mahila Bank. Last year, Vijaya Bank and Dena Bank were merged with Bank of Baroda. Kotak Mahindra Bank and ING Vysya Bank merger and amalgamation of Centurion Bank of Punjab Ltd. with HDFC Bank took place in 2014 and 2008, respectively.