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India to have only 12 Public sector banks: Sitharaman's big announcement on banks merger

By Simran Kashyap
|

New Delhi, Aug 30: In another round of boosters for the economy, Finance Minister Nirmala Sitharaman announced to amalgamate 10 public sector banks into four banks.

India to have only 12 Public sector banks: Sitharaman announces big banks merger

In a major development, Sitharaman announced that government has decided to merge Punjab National Bank, Oriental Bank of Commerce and United Bank; Canara Bank and Syndicate Banks; Union Bank of India, Andhra Bank and Corporation Bank; and Indian Bank and Allahabad Bank.

Objective of the mergers, she said is to make them global sized banks. In January this year, the Union Cabinet had approved merger Dena Bank and Vijaya Bank with Bank of Baroda.

The merger came in to effect from April 1. With these mergers, the number of PSBs will come down to 12 from 27 in 2017.

This, the government feels, will make bank balance sheet stronger with greater capacity to lend. Oriental Bank of Commerce and United Bank merger will merge into Punjab National Bank to create a bank with Rs 17.95 lakh crore business and 11,437 branches, Sitharaman told a news conference here.

The merger of Syndicate Bank with Canara Bank will create the fourth largest public sector bank with Rs 15.20 lakh crore business and a branch network of 10,324.

Andhra Bank and Corporation Bank's merger with Union Bank of India will create India's fifth largest public sector bank with Rs 14.59 lakh crore business and 9,609 branches.

The merger of Allahabad Bank with Indian Bank will create the seventh largest public sector bank with Rs 8.08 lakh crore business with strong branch networks in the south, north and east of the country, she said, adding that Bank of India and Central Bank of India will continue to operate as before.

Last year, the government had merged Dena Bank and Vijaya Bank with Bank of Baroda, creating the third-largest bank by loans in the country. After the mergers, the country will have 12 public sector banks, including State Bank of India and Bank of Baroda.

    Why were 10 mega public sector banks merged to 4 PSBs, know here

    Also, Indian Overseas Bank, Uco Bank, Bank of Maharashtra and Punjab and Sind Bank, which have strong regional focus, will continue as separate entities. The finance minister also unveiled governance reforms in public sector banks, saying their boards will be given autonomy and enabled to do succession planning. Also, bank boards will be given flexibility to fix sitting fee of independent directors, she said, adding that non-official directors will perform role analogous to independent directors.

    "To make management accountable to board, board committee of nationalised banks to appraise performance of general manager and above including managing director," she said. Post consolidation, boards will be given flexibility to introduce chief general manager level as per business needs. They will also recruit chief risk officer at market-linked compensation to attract best talent.

    Prior to this, the government had merged five associate banks of SBI and Bharatiya Mahila Bank with State Bank of India. These were State Bank of Patiala, State Bank of Bikaner and Jaipur, State Bank of Mysore, State Bank of Travancore and State Bank of Hyderabad and also Bharatiya Mahila Bank effective April 2017.

    Gross NPAs have come down to Rs 7.9 lakh crore, says Nirmala Sitharaman

    Full list of public sector bank to be merged:

    1. Punjab National Bank, Oriental Bank of Commerce and United Bank

    2. Canara Bank and Syndicate Bank

    3. Union Bank of India, Andhra Bank and Corporation Bank

    4. Indian Bank and Allahabad bank

    This come a week after Finance Minister announced a series of measures to boost the economy.

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