On Friday, Finance Minister Nirmala Sitharaman announced mega mergers of 10 state-run banks into four banks with an aim to unleash greater efficiencies and latent strength in India’s banking sector with an eye on realising government’s $5 Trillion economy dream.
The biggest merger will be of Punjab National Bank with Oriental bank of Commerce and United Bank of India to create India’s second largest Public Sector Bank (PSB) with a business of Rs 17.5 lakh crores.
New entity will have the second largest branch network.
Finance Minister stated that idea was to combine “the large capacity” of the Punjab National Bank with “technology driven capacity” of OBC and the “strong deposit franchise” of the United Bank of India.
In the second merger will be of two big banks from South India, Canara Bank and Syndicate Bank will be combined to create the 4th largest Public Sector Bank with a business of Rs 15.20 lakh crores. Merged entity will have the 3rd largest branch network in India with 10342 branches. This merger will lead to large cost reduction and increased synergy due to network overlap.
The third merger will combine the Union Bank of India with Andhra Bank and Corporation bank into one entity to create the 5th largest PSB which will be twice the size of Union Bank of India. Merged entity will have business of Rs 14.9 lakh crore and will be the 4th largest, in terms of branch network, with 9609 branches.
In the fourth merger, Indian Bank will be combined with Allahabad Bank to create the 7th largest PSB with business of Rs 8.08 lakh crore. This merger, Sitharaman said, with its strong networks in the South, North and East will have a nationwide presence. These three banks also had complimentary technology, she said.
Minister added that,“Strong national presence and global reach was one of the objectives of the consolidation plan". “82 per cent of all PSB business and 56 per cent of all commercial bank business will now be with these entities,” she stated.
Source HT
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