The 10 Public sector banks have been merged into 4 public sector banks from April 1, 2020. This action has been taken to strengthen the country’s banking system. It is part of the government’s plan of making India a $5-trillion economy by 2025.
Moreover, the merger would help create banks with scale comparable to global banks and capable of competing effectively in India and globally.
With this mega-bank merger, the number of PSBs will get consolidated from 27 banks in 2017 to 12 banks in 2020.
The government had front-loaded Rs 68,855 crore to take care of the bank-merger plan, following as Punjab National Bank has given Rs 16,091 crore, Union Bank of India Rs 11,768 crore, Canara Bank Rs 6,571 crore and Indian Bank Rs 2,534 crore. Allahabad Bank was provided Rs 2,153 crore, United Bank of India Rs 1,666 crore, Andhra Bank Rs 200 crore, Indian Overseas Bank Rs 4,360 crore and UCO Bank Rs 2,142 crore.
Here is the list of merging banks:
- Oriental Bank of Commerce (OBC) and United Bank of India (UBI) merged with Punjab National Bank (PNB), It will form the nation’s second-largest lender.
- Syndicate bank merged with Canara Bank, it will form the fourth-largest public sector bank
- Allahabad Bank merged with the Indian Bank, it will form the seventh-largest public sector bank
- Andhra Bank and Corporation Bank merged with Union Bank of India, it will form India’s fifth-largest public sector bank.
After this merger, now the branches of the merged lenders will operate as part of the four leader banks and the customers and depositors of the merged banks will be treated as customers of the four banks.