Each of the amalgamated entities with scale and national reach
would have a business of over Rs 8 trillion.
The landscape of
the Indian banking will see a change with the consolidation of 10 public
sector banks (PSBs) into four, effective April 1. The mega exercise comes
at a time when the country and financial system is grappling with adverse
fallout of the Covid-19 pandemic.
Oriental Bank of
Commerce (OBC) and United Bank of India (UBI) will merge into Punjab
National Bank. Mumbai-headquartered Union Bank will absorb
Hyderabad-headquartered Andhra Bank and Mengaluru- headquartered Corporation
Bank. Bengaluru-headquartered Canara Bank will take Syndicate Bank and Indian Bank
will acquire Kolkata-headquartered Allahabad Bank.
Each of the
amalgamated entities with scale and national reach would have a business of
over Rs 8 trillion.
The consolidation
is expected to help create banks with scale comparable to global banks and
capable of competing effectively in India and globally. Greater scale and
synergy through consolidation would lead to cost benefits, which should enable
the PSBs enhance their competitiveness and positively impact the Indian banking
system.
The adoption of
best practices across amalgamating entities would enable the banks improve
their cost efficiency and risk management, and also boost the goal of financial
inclusion through a wider reach.
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 State Bank of India.
