Harmonisation of banking products, policies and processes for the merger of Allahabad Bank with Indian Bank is going on ‘smoothly’, and the two lenders are working to meet the April 1 deadline as the probable effective date for the mega consolidation of 10 state-owned banks.
The two banks have also chalked out plans to clock Rs 10 lakh-crore business for the amalgamated entity in the next two-three years. “We have a plan to expand total branches for the merged entity to 10,000 and register Rs 10 lakh-crore business in another two-three years. We are very very positive on that,” said an Allahabad Bank source familiar with the matter.
The proposed merger of Kolkata-headquartered Allahabad Bank and Chennai-based Indian Bank will make the new entity the seventh-largest bank in India. Indian Bank is the anchor bank in this merger process. Notably, at the end of the third quarter this fiscal, the combined business of the two banks stood at Rs 8.44 lakh crore with a total of 6,062 branches.
Indian Bank’s business stood at Rs 4.5 lakh crore with 2,887 branches as on December 31, 2019, while Allahabad Bank’s total business as on December 31 last year stood at Rs 3.94 lakh crore with 3,175 branches.
“In our case, the greatest advantage is none of the branches is going to be closed. Only those branches which are just adjacent to each other will be combined,” the source cited above informed.
He said the two banks are prepared to meet the April 1, 2020 deadline as the probable effective date for the consolidation. The government is, however, yet to issue a notification in relation with the amalgamation scheme. “The notification on merger from the government is expected to come very soon. I don’t see any ambiguity in the way the finance ministry is working…We (banks) are working as if the merger will happen from April 1,” the source said.
Finance minister Nirmala Sitharman recently reiterated that there was no uncertainty about merger of bansks and the process is on “as per the schedule”.
According to the Allahabad Bank source, harmonisation of HR policies of the two banks was going on ‘smoothly’. “It is basically a horizontal merger. It does not take a lot of time. But complete integration will take some time. It will not happen overnight, it will at least take 12-18 months for us for completing integration of all the processes.”
“From Day 1, very limited processes will be merged. Complete integration of core banking system (CBS) will not happen from Day 1 of the merger,” he said.
