Some of the anchor banks in the consolidation process were earlier asked to give presentations on their plans for the merger and how the entire amalgamation exercise was going to pan out.
The Prime Minister’s Office (PMO) is learnt to have held a meeting on Wednesday on the proposed amalgamation of 10 public sector banks (PSBs) to create four larger lenders.
Some of the anchor banks in the consolidation process were earlier asked to give presentations on their plans for the merger and how the entire amalgamation exercise was going to pan out. However, there was no official word on any such meeting.
On February 15, finance minister Nirmala Sitharaman had said there was no reason to go back on the merger decision, refuting any particular reason behind the “delay” in notifying the final structure of the merger, amid speculations that it might be put off beyond the intended date of April 1. While the merger of 10 banks has been announced, the scheme to implement amalgamation is yet to be endorsed by the Cabinet.
The government had in August last year announced that Oriental Bank of Commerce and United Bank would be merged into Punjab National Bank (PNB) to create the country’s largest state-run bank after SBI, with a total business of close to Rs 18 lakh crore.
Similarly, Syndicate Bank is to be amalgamated with Canara Bank, and the broader entity will be the fourth-largest PSB. Union Bank, Andhra Bank and Corporation Bank will be merged and emerge as the fifth-largest state-run bank. Also, the amalgamation of Indian Bank and Allahabad Bank will create the 7th biggest PSB. Boards of all these PSBs have already approved the merger and a final scheme, with details of the amalgamation, will soon come before the Cabinet.
The consolidation exercise was aimed at creating only a few but strong banks to support the rising credit appetite of the economy and cut costs through greater synergy. Coupled with the two sets of consolidations done in 2018, the latest merger decision will reduce the number of public sector banks to 12 from 27 in 2017.