After mega-merger effective today, six banks will cease to exist
The new financial year beginning today will see the merger of six public sector banks into four (the anchor banks) in a bid to make them globally competitive.
As per the government’s mega consolidation plan, Oriental Bank of Commerce and United Bank of India will merge into Punjab National Bank (PNB); Syndicate Bank into Canara Bank; Andhra Bank and Corporation Bank into Union Bank of India; and Allahabad Bank into Indian Bank.
The exercise assumes significance as it is taking place at a time when the entire country is under the grip of the Covid-19 outbreak, which has triggered a 21-day lockdown.
Experts said merger at this point of time will not be very smooth and seamless. However, heads of the anchor banks exuded confidence.
“We don’t foresee any problem it is going as per the plan. We have reviewed in the light of this situation also. Certain modification in implementation we have done so that there is no disruption for employees and customers. We are ensuring zero disruption,” Union Bank of India Managing Director Rajkiran Rai G told news agency PTI.
Following the consolidation, there will be seven large public sector banks (PSBs), and five smaller ones. The PNB will become second largest after the State Bank of India (SBI), Canara Bank fourth, Union Bank of India fifth and Indian Bank seventh biggest public sector lender.
“We have planned very well and from tomorrow onwards we will ensure that the merged entity functions more efficiently and effectively. Particularly we would ensure that customer services remain uninterrupted,” PNB MD S S Mallikarjuna Rao said.
There were as many as 27 public sector banks (PSBs) in 2017. The total number of public sector banks in the country will come down from 18 to 12 in the new financial year.
“We are delighted that following the amalgamation as a single legal entity, we will become a powerful banking institution that is globally competitive and efficient working towards providing differentiated customer experience excellence across all our products and services,” Canara Bank MD L V Prabhakar said.
The merger will result in the creation of seven large PSBs with scale and national reach, with each amalgamated entity having business of over Rs 8 lakh crore. It would help create banks with scale comparable to global banks and capable of competing effectively in India and globally.
Last year, Dena Bank and Vijaya Bank were merged with Bank of Baroda. Prior to this, the government had merged five associate banks of SBI and Bharatiya Mahila Bank with the public sector bank.
These were State Bank of Patiala, State Bank of Bikaner and Jaipur, State Bank of Mysore, State Bank of Travancore and State Bank of Hyderabad effective April 2017.
(With inputs from agencies)