Merger of 10 PSU Banks into 4 comes into effect from today
Under the consolidation scheme, United Bank of India and Oriental Bank of Commerce will be merged into Punjab National Bank.
The merger of 10 state-run banks into 4 larger banks has been implemented from today, April 1, 2020. The announcement regarding the amalgamation has been done by GOI earlier in March 2020.
The government made this announcement in early March with the purpose of creating stronger banks in the public sector. Though the central government announced the plan but RBI has been given the charge for the successful implementation of the plan.
The branches of the state-run banks will work as the branches of the banks in which they have amalgamated. This decision by GOI has been taken under Section 7 of RBI that gives the power to the government to make rulings on RBI functioning in the interest of the public.
Details of 10 State-Run Banks Amalgamation:
As per the consolidation scheme, the details of 10 state-run banks into 4 are mentioned below-
• United Bank of India and Oriental Bank of Commerce will merge into Punjab National Bank
• Syndicate Bank will merge into Canara Bank
• Allahabad Bank into Indian Bank
• Corporation and Andhra Banks will be merged in Union Bank of India
The objective behind the merger:
The major objectives of the merger are:
• To help India make a USD 5 trillion economy
• Reducing the lending cost
• Enhancing the capacity in order to increase credit
• To bring next-generation technology for the banking sector
• Banks that have strong national and international reach
• To improve the ability to raise market resources.
The announcement of the mega-merger of the ten big public sector banks (PSBs) into four was made by Union Finance Minister Nirmala Sitharaman in August 2019. The merger was under the Bank Consolidation plan among other major initiatives and steps with the aim to boost India’s economic growth. The Union Cabinet under the chairmanship of PM Narendra Modi gave its official approval to the merger plan in early March 2020.