MERGER OF 10 PSBS GETS CABINET NOD

NEW DELHI: The Union cabinet on Wednesday approved the consolidation of 10 public sector banks (PSBs) into four entities, a move aimed at having fewer but stronger lenders in India.

“The amalgamation is being done so that customers are able to reap the benefit of larger banks being scaled up and more fund being available for credit,” finance minister Nirmala Sitharaman told reporters.

“Banks are fully on board and this will be effective from 1 April,” Sitharaman said. “To a large extent, I am convinced that the banks are on course. They have no issues carrying forward with the merger activity…core interest for banking, customers have been kept in mind.”

At present, India has 18 stateowned banks compared with 27 in 2017. After the merger, the number will further come down to 12.

The finance ministry’s decision is in line with the National Democratic Alliance government’s push for consolidation of state-owned banks, which it believes will not only lead to economies of scale, but also make lenders stronger, more competitive, and improve their risk-taking appetite.

Last August, the finance ministry had announced the consolidation of 10 public sector lenders. Punjab National Bank, Oriental Bank of Commerce and United Bank will be brought together to form the second largest public sector bank in the country, after State Bank of India.

Canara Bank and Syndicate Bank will merge to become the fourth-largest public sector lender, while Union Bank of India will merge with Andhra Bank and Corporation Bank to build India’s fifth-largest lender. Indian Bank will merge with Allahabad Bank to make India’s seventh-largest PSB.