The biggest ever consolidation exercise in the public sector banking space is slated to take shape on Wednesday when six PSU lenders will be merged into four in a bid to make them globally competitive. The exercise assumes significance as it is taking place at a time when the entire country is under the grip of COVID-19 outbreak.
- This triggered 21-day lockdown to contain the spread of the deadly virus.
- Experts said merger at this point of time will not be very smooth and seamless.
- However, heads of the anchor banks are exuding confidence.
The four anchor banks — PNB, Canara Bank, Union Bank and Indian Bank — are postponing some part of the implementation and processes due to the lockdown.
- For merging banks, some of the process like loan process etc, has not bee changed which the banks had proposed to do earlier.
- Because of the prevailing situation these banks will be continuing old system till the situation comes under control.
- With the merger, the bank looking at more than Rs 2,500 crore of synergy benefits in the next three years.
- As per the mega consolidation plan, Oriental Bank of Commerce and United Bank of India will merge into Punjab National Bank (PNB); Syndicate Bank into Canara Bank; Andhra Bank and Corporation Bank into Union Bank of India; and Allahabad Bank into Indian Bank.
- Following the consolidation, there will be seven large public sector banks (PSBs), and five smaller ones. There were as many as 27 PSBs in 2017.
- The total number of public sector banks in the country will come down from 18 to 12 beginning next financial year.
- Following this merger, PNB will become second largest after the State Bank of India (SBI), Canara Bank fourth, Union Bank of India fifth and Indian Bank seventh biggest public sector lender
Comments from Executives:
- 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 public sector bank.
- 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 effective April 2017.