Mega-Merger Of PSU Banks To Be Effective From Today; Key Points

Starting April 1 (today) ten state-owned banks will merge, and its branches will operate as the bank it has amalgamated to.

(Representative Image/ Getty)

Starting April 1, ten state-owned banks will merge, and its branches will operate as the bank it has amalgamated to. The government on March 4 had notified about the amalgamation schemes for 10 state-owned banks into four as part of its consolidation plan to create bigger size stronger banks in the public sector. Key Points: 

• According to the scheme, Oriental Bank of Commerce and United Bank of India will be merged into Punjab National Bank; Syndicate Bank into Canara Bank; Allahabad Bank into Indian Bank; and Andhra and Corporation banks into Union Bank of India.

After the merger, the RBI stated in separate releases that for the next fiscal year 2020-21, these branches will operate as the one it has been consolidated with.

• Branches of Oriental Bank of Commerce and United Bank of India will operate as branches of Punjab National Bank;
• Syndicate Bank branches will function as that of Canara Bank;
• Allahabad Bank branches will operate as those of Indian Bank
• Branches of Andhra Bank and Corporation Bank will function as the branches of Union Bank of India

The RBI said, "The Amalgamation of Oriental Bank of Commerce and United Bank of India into Punjab National Bank Scheme, 2020 dated March 4, 2020, issued by the Government of India... The scheme comes into force on the 1st day of April 2020."

• Starting April 1, 2020, the customers of the merging bank will also be treated as customers of the banks in which the bank has been merged.
• Although the bank officer’s union had written to the Prime Minister seeking a deferment of the decision and also an extension of closing related activities and closing date from March 31 to June 30 due to the coronavirus lockdown, Finance Minister Nirmala Sitharaman clarified on Thursday that bank consolidation will happen as planned.
• With the latest bank merger, India will have seven large public sector banks and five smaller ones. PNB will become the second-largest bank after State Bank of India, Canara Bank will stand in the fourth, Union Bank will stand in the fifth and Indian banks will be the seventh biggest public sector banks.
• Since 2017, a slew of bank mergers has reduced the number of public sector banks from 18 to 12. In 2019, Dena Bank and Vijaya Bank were merged with Bank of Baroda and in2017 five associate banks of State Bank of India (SBI), State Bank of Patiala, State Bank of Bikaner and Jaipur, State Bank of Mysore, State Bank of Travancore and State Bank of Hyderabad and Bharatiya Mahila Bank were consolidated with SBI.