Bank Merger: Govt has said Public Sector Banks will not be Merged as of Now

Minister of State for Finance Pankaj Chaudhary clarified on Tuesday that the government is not considering any new mergers of public sector banks (PSBs).

Steps Taken to Strengthen PSBs

In a written reply to the Rajya Sabha, Chaudhary outlined measures taken to strengthen the financial health of PSBs. He noted that banking sector reforms have introduced systemic improvements and implemented checks to reduce the risk of excessive financial stress.

No Plans for Further Mergers

Addressing a question on potential PSB mergers, Chaudhary stated, “No, sir.” He further explained that previous mergers have resulted in improved financial performance across key parameters, including capital adequacy ratios and gross non-performing assets (NPAs).

Benefits of Previous Bank Mergers

Chaudhary highlighted that past mergers have brought about:

• Improved synergies.
• Economies of scale.
• Enhanced technology integration.
• Uniform improvements in financial indicators.

The 2019 Bank Consolidation Exercise

In August 2019, the government announced the largest consolidation in the banking sector. This move reduced the number of PSBs from 27 in 2017 to 12, aiming to create global-scale state-owned banks.

Details of the Mergers

The consolidation involved the following:

• United Bank of India and Oriental Bank of Commerce merged with Punjab National Bank.
• Syndicate Bank merged with Canara Bank.
• Allahabad Bank merged with Indian Bank.
• Andhra Bank and Corporation Bank merged with Union Bank of India.

These mergers became effective on April 1, 2020.

Earlier Bank Mergers

In 2019, Dena Bank and Vijaya Bank were merged with Bank of Baroda. Prior to this, the five associate banks of the State Bank of India (SBI) and Bharatiya Mahila Bank were integrated into SBI, marking another major consolidation effort.