On August 30, FM Nirmala Sitharaman revealed a mega merger plan for public sector banks, merging 10 banks into 4. The Finance Minister announced four mergers to reduce the number of state-owned banks to 12. The government could soon announce more measures to boost the economy.
Finance minister Nirmala Sitharaman has said, “Consumption needs a boost…. more measures to accelerate economic growth are in the pipeline and would be announced in the coming weeks,” the minister told reporters in Guwahati on Thursday. She said spending on infrastructure would be the government’s priority. “We can frontload some public spending by the government,” she added.
United Bank and Oriental Bank of Commerce will be amalgamated into Punjab National Bank and they will form the second largest public sector bank with the business of Rs 17.95 Lakh crore. The second amalgamation would be between Canara Bank and Syndicate Bank. The resultant entity would be the fourth largest Public Sector Bank with a business size of Rs 15.20 lakh crore.
FM Sitharaman declared that Union Bank of India, Andhra Bank and Corporation Bank would be merged to form the fifth-largest state-owned bank and a combined business of Rs 14.59 lakh crore. Indian Bank and Allahabad Bank would be brought together to form the seventh-largest public sector bank with a business of Rs 8.08 lakh crore.
On the other hand,Bank of India, Central Bank of India, UCO Bank, Bank of Maharashtra, and Punjab and Sindh Bank will persist to function as before and will be provided necessary support from the government.
During the press conference Finance Secretary Rajeev Kumar said ,”The amalgamation proposals would now be taken to the boards of the banks involved in the merging scheme for approvals. The prospect would be discussed with the RBI in two phases.
The government has guided that the technological platforms used by the banks are reconcilable and enable a quick realization of gains without any customer unease or disruption in services. This is an initial bank merger measure since the Modi government’s return to power in May earlier this year. During its last tenure, the NDA-led regime had merged State Bank of India with its five associate banks and Bharatiya Mahila Bank, followed by the merger of Bank of Baroda, Dena Bank and Vijaya Bank.