Banks' merger to come into effect from April 1

New Delhi, Mar 04: Finance Minister Nirmala Sitharaman on Wednesday said the exercise of consolidation of 10 public sector banks (PSBs) into four is on course and the merger will come into effect from April 1, 2020.

The Union Cabinet, she said, has given a go-ahead for the merger proposal and the government has been in regular touch with these banks. There will be no regulatory issues, she said. "The banks' merger is on course and decisions have already been taken by the respective bank boards," she told reporters.

The mergers are aimed at creating global sized banks in India.

In the biggest consolidation exercise in the banking space, the government in August 2019 had announced four major mergers of public sector banks, bringing down their total number to 12 from 27 in 2017, a move aimed at making state-owned lenders global sized banks.

United Bank of India and Oriental Bank of Commerce will be merged with Punjab National Bank; Syndicate Bank will be merged with Canara Bank; Allahabad Bank will be amalgamated with Indian Bank; and Andhra Bank and Corporation Bank will be consolidated with Union Bank of India.

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 the State Bank of India.