Bank Merger: Another Big Bank Merger! 4 Public Sector Banks in Existence Crisis? Know Details

Bank Merger: The Central Government is poised to initiate another major overhaul in the country’s banking sector. With the ambitious goal of ‘Viksit Bharat 2047’ (Developed India 2047) in sight, plans are underway to consolidate Public Sector Banks (PSBs) to make them more robust and world-class. According to sources, the Finance Ministry and the Reserve Bank of India (RBI) have already commenced preliminary discussions regarding this mega merger process. This move could potentially lead to the dissolution of the independent identity of several well-known government banks.

Aiming for World-Class Banking Systems

Last month, Union Finance Minister Nirmala Sitharaman emphasized the need for India to have fewer but stronger, global-sized banks. The government’s objective is to merge smaller public sector banks with larger ones to create financial institutions capable of competing on the international stage. Currently, India’s presence in the list of top global banks is minimal, and this initiative aims to change that narrative.

Which Banks Are Likely to Be Merged?

Reports suggest that four major public sector banks could be brought under this consolidation drive. These banks might be merged with larger entities like the State Bank of India (SBI), Punjab National Bank (PNB), or Bank of Baroda. The list of potential candidates for merger includes:

• Indian Overseas Bank
• Central Bank of India
• Bank of India
• Bank of Maharashtra

India’s Current Standing and Banking Infrastructure

At present, there are 12 Public Sector Banks (PSBs) in India. However, when evaluated against international standards, only one Indian bank features in the top 50 banks globally. The State Bank of India (SBI) ranks 43rd, while the private sector lender HDFC Bank stands at the 73rd position. The government intends to reduce the number of PSBs to enhance their capital base and operational efficiency.

History of Bank Mergers in India

Bank consolidation is not a new phenomenon in India. Under the current administration, there have been multiple instances where smaller banks were merged into larger anchors. A massive merger was announced in August 2019, which came into effect on April 1, 2020. During that phase, the number of PSBs was reduced from 27 to just 12.

Below is a list of some significant bank mergers that have taken place in the past:

Experts believe that once this new merger process is completed, it will bring radical changes to customer services and banking infrastructure. However, questions remain among customers regarding the impact on their accounts and services.

Note: This article is for informational purposes only. Please consult an expert before making any financial decisions.