In a major development, Finance Minister Nirmala Sitharaman promulgated the government’s decision to merge 10 public sector banks into four.
Finance Minister Nirmala Sitharaman promulgated on Friday the merger of Oriental Bank of Commerce and United Bank with Punjab National Bank. She further said that Syndicate Bank will be merged with Canara Bank and the Corporation Bank will merge with Union Bank of India. Beside this, Indian Bank will merge with Allahabad Bank. This merger wil make Allahabad Bank the seventh-largest PSB in India with a business of ₹8.08 trillion.
While Punjab National Bank has now become India’s second-largest bank with business of ₹7.95 trillion, the merger of Canara Bank and Syndicate Bank has made it the fourth-largest bank, with business of ₹15.2 trillion.
The Finance Minister asserted that the previous merger of Bank of Baroda, Vijaya Bank and Dena Bank had led to better customization and rationalization of operations without any retrenchment. While CASA (current and savings account) growth stood at 6.9% in the June quarter, retail loan growth was recorded at 20.5%. Profitability was around ₹710 crore, she added
Sitharaman also announced capital infusion of over ₹55,000 crore into public sector banks: PNB ( ₹16,000 crore), Union Bank of India ( ₹11,700 crore), Bank of Baroda ( ₹7000 crore), Indian Bank ( ₹2500 crore), Indian Overseas Bank ( ₹3800 crore), Central Bank ( ₹3300 crore), UCO Bank ( ₹2100 crore), United Bank ( ₹1,600 crore) and Punjab and Sind Bank ( ₹750 crore).
After the consolidation, boards will be given flexibility to recruit chief general manager level. They will also hire chief risk officer at market-linked compensation to attract best talent.
The Finance Minister averred that the consolidation of PSBs will give them scale. The total number of public sector banks in India now stands at 12, as opposed to 27 PSBs in 2017.
