Finance Minister Nirmala Sitharaman has announced four mega mergers involving ten state-run banks to create financial behemoths aimed at creating greater efficiencies and strength in the banking sector to support speedy growth to achieve the $5 Trillion-economy target, on Friday.
The biggest of the four, will be the merger of Punjab National Bank with Oriental bank of Commerce and United Bank of India to create India’s second largest public sector bank with a business of 17.5 lakh crores. The new entity will also have the second largest branch network.
The 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, said the Finance Minister.
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In the second merger, two big banks from south India, Canara and Syndicate Bank will be combined to create the 4th largest Public Sector Bank with a business of Rs 15.20 lakh crores. The 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, said Sitharaman.
‘The two banks had similar culture and there will be continuation of service for customers without disruption as both use compatible financial technology and will be able to integrate quickly,’ said the Finance Minister.
The third merger will combine 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. The 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 R 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.
