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The central government has laid great emphasis on the merger of banks. Six more banks may be merged in this series. Let us know who they are-
The central government is again preparing for major changes in the banking sector. There are reports that the government is considering merging six big public sector banks with each other or with any big bank. This discussion has intensified because the government wants to create some big banks in India too, which can make a place among the top 100 banks of the world. The largest government bank SBI also wants to create bigger banks in future, so that its market value can increase further. At present, a decision is yet to be taken on six PSU banks and talks are going on regarding this. The main objective of bank merger is to strengthen the financial position, reduce NPA (Mondi outstanding), increase digital facilities and strengthen the competitiveness of Indian banks at the global level.
The banks whose merger is under discussion include Bank of India, Indian Overseas Bank, Central Bank of India, Bank of Maharashtra, UCO Bank and Punjab and Sindh Bank. Some of these banks may merge with each other or with a bigger bank.
Many big banks have merged in India since 1993. The banking system underwent major changes over three decades, and a strategy was adopted to create a larger and stronger institution by merging several banks. Due to such mergers, the capital capacity of banks increased, it became easier to adopt better technology, risk was reduced and expenses due to overlap of branches were reduced.
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If we look at the recent big mergers, in April 2017, SBI had merged six of its associate banks into itself. These banks included State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Patiala, State Bank of Mysore, State Bank of Travancore and Bharatiya Mahila Bank. This made SBI the largest government bank in the country. This idea was first put forward by former Finance Minister Arun Jaitley in the government that there should be fewer but strong public sector banks.
In April 2019, Bank of Baroda merged Vijaya Bank and Dena Bank. After this, Bank of Baroda became the third largest government bank in the country. In April 2020, PNB merged Oriental Bank of Commerce and United Bank of India, making PNB the second largest PSU bank. In the same year, Karnataka based Canara Bank added Syndicate Bank and became the fourth largest PSU bank in the country. Union Bank of India merged with Andhra Bank and Corporation Bank to become the fifth largest PSU bank. After this, Indian Bank merged with Allahabad Bank and became the seventh largest bank.
Now the question is, whose merger will happen next? All the big mergers that took place between 2017 and 2020 took place in April, i.e. at the beginning of the financial year. Even though the Finance Ministry has not yet officially revealed any name, it is expected that a big announcement in this regard may be made by April 2026. According to reports, the government is preparing the next round of banking merger plan and some official information may come out in April-May. This time, there will not be big mergers at once like before, rather the plan can be implemented in two-three phases, so that the process becomes easier and capital management can be done in a better way.
According to a report, the government’s long-term goal is to reduce the number of public sector banks from 12 to 6-7 strong and competitive institutions. This will strengthen the balance sheets of banks, increase loan giving capacity, improve functioning and especially create large capacity banks to support India’s rapidly growing infrastructure sector.
