PSU Bank Merger: The number of government banks in the country is going to reduce even further. The government is merging small government banks with big banks. The purpose of doing this is to create one big bank instead of small banks, which will improve their working capacity. The government wants that the number of banks should be reduced, but it should emerge as a strong entity so that the financial sector can be reformed, the scope of loans can be increased, the balance sheet and operations can also be improved. In this sequence, preparations are now in full swing to merge six more small government banks.
Which banks are included in the list?
Six small public sector banks like Indian Overseas Bank, Central Bank of India, UCO Bank, Bank of India, Bank of Maharashtra, Bank of India and Punjab and Sindh Bank can be merged with SBI, Bank of Baroda, PNB, Canara Bank or Union Bank. All these six banks are on the radar for the next phase of consolidation.
What was the suggestion of NITI Aayog?
Earlier, a NITI Aayog report had suggested that the government privatize or restructure small banks like Central Bank of India and Indian Overseas Bank. The country’s think tank believes that the Indian government should keep some large public sector banks, including Punjab National Bank (PNB), Bank of Baroda (BoB), Canara Bank, or State Bank of India. Whereas the remaining small government banks can either choose the option of privatization or merger or the government stake in them can be reduced.
According to reports, Indian Overseas Bank can be merged with SBI or PNB. PNB or BoB can take over Central Bank of India. Either SBI or BoB can take over Bank of India. Bank of Maharashtra can be merged with PNB or BoB.
Earlier the merger of these banks took place
Earlier, between 2017 and 2020, 10 small government banks were merged into 4 banks, due to which the number of government banks in the country reduced from 27 in 2017 to 12. State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala, State Bank of Travancore and Bharatiya Mahila Bank were merged into State Bank of India.
Whereas Oriental Bank of Commerce and United Bank of India were merged into Punjab National Bank. Dena Bank and Vijaya Bank were merged with Bank of Baroda. Syndicate Bank was merged into Canara Bank. Whereas Andhra Bank and Corporation Bank were merged into Union Bank of India and Allahabad Bank was merged into Indian Bank.
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