Nirmala Sitharaman: PNB, Oriental Bank and United Bank to be merged

Finance Minister Nirmala Sitharaman with finance secretary Rajiv Kumar during a press conference in New Delhi | PTI

The third will consist of Indian Bank and Allahabad Bank and the last will be the merger of Canara Bank with Syndicate Bank.

Giving a break-up of which bank gets how much, the Finance Minister said that the PNB would get Rs 16,000 crore and Rs 11,700 crore will go to the Union Bank Of India.

The merger between Union Bank of India, Andhra Bank and Corporation Bank shall become the fifth largest public sector bank now whereas Indian Bank amalgamation with Allahabad Bank will be the seventh-largest Public Sector Bank with a business amounting to Rs 8.08 lakh crores.

Consolidation among public sector banks has been on the agenda for the NDA government since 2014, when it first came into power.

J Packirisamy, MD & CEO of Andhra Bank said, "We are getting merged with Union Bank of India along with Corporation Bank".

In major reforms in the banking sector, Finance Minister Nirmala Sitharaman announced the amalgamation of 10 public sector banks (PSBs) into four entities.

Finance Minister Nirmala Sitharaman Friday announced the merging of a number of Public Sector Banks (PSB) in order to revive and revitalise the banking sector with the objective of achieving the $5-trillion economy target.

Mega Public Sector Banks merger: 10 banks amalgamated into 4-entities
Union Bank of India will subsume with Andhra Bank and Corporation Bank to turn into the fifth largest state-owned bank. The development comes a week after the government announced a number of major policy decisions to revive the economy.

She said that Punjab National Bank, Oriental Bank of Commerce and United Bank will marge to acquire one unified identity.

After these mergers, the country will have 12 public sector banks, including State Bank and Bank of Baroda.

Srikanth Vadlamani, vice-president for financial institutions group at Moody's, said, "the consolidation move is credit positive as it enables the consolidated entities to meaningfully improve scale of operations and help their competitive position in segments such as corporates where their share of customer wallet tends to be low, and retail loans where their operations are sub-scale". These banks continue to be at the mercy of the government for capital and many of them score relatively less with respect to efficiency when pitted against private rivals.

Additionally, the total business of the merged entity of Canara Bank and Syndicate Bank will be Rs 15.20 lakh crore. The government also announced Rs 55,250 crore upfront capital for credit growth and regulatory compliance to support the economy.

However, Bank of India and Central Bank is said to remain independent.

Even the industry lobby, Indian Banks' Association (IBA) regularly consult with trade unions to decide maters such as compensation and work hours, etc. The government has taken care of technology synergy by clubbing banks using the same technology platform, but what about the work culture and regional focus?

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