FM announces Public Sector Banks mergerPNB, OBC, United Bank to become 2nd largest after SBI


Thesynergyonline Banking Bureau

NEW DELHI, AUGUST 30 :

The Union Minister of Finance & Corporate Affairs Mrs Nirmala Sitharaman on Friday announced the merger of several banks to form new public sector banks (PSBs) with a target of reaching the $5 trillion economy.


The Minister stressed on the need for consolidation by amalgamating banks to put in a robust network to revive the ailing sector.

The development comes a week after the government announced a slew of measures to revive growth in the Indian economy. In one of the biggest mergers since the integration of SBI with five associate banks, the government announced the merger of Punjab National Bank (PSB), Oriental Bank of Commerce (OBC) and United Bank of India with a business of Rs 17.95 lakh crore and a network of 11,437 branches across India forming the second largest Public Sector Bank (PNB).

The Minister also announced the consolidation of Canara bank with Syndicate Bank to form the third-largest PSB with a business of Rs 15.20 lakh crore. The merger of Union Bank with Andhra Bank and Corporation Bank will form the fourth-largest PSB with 9,609 branches. The government also announced the merger of Indian Bank with Allahabad bank with a business of Rs 8.08 lakh crore, 1.9 times of Indian Bank and covering south, north and eastern sectors.

Public sector banks merger
Partial credit guarantee scheme for NBFCs has been executed since the last announcements and Rs 3,300 crore liquidity support has been given, while Rs 30,000 crore is in pipeline. We need to lay a strong foundation for finance sector by strengthening the banks and giving them a good governance module. In the last several years, we have made sure that several banking reforms are undertaken." Mrs Nirmala Sitharaman
Union Minister of Finance
& Corporate Affairs

10 PSBs will get a total of Rs 55,250 crore out of which PNB gets Rs 16,000 crore

The breakup

Punjab National Bank -- Rs 16,000 crore
Union Bank of India -- Rs 11,700 crore
Bank of Baroda -- Rs 7,000 crore
Canara Bank -- Rs 6,500 crore
Indian Bank -- Rs 2,500 crore
Indian Overseas Bank -- Rs 3,800 crore
Central Bank of India -- 3,300 crore
UCO Bank -- Rs 2,100 crore
United Bank of India -- Rs 1,600 crore
Punjab & Sind Bank -- Rs 750 crore

Meanwhile, the Bank of India and Central Bank of India will continue as central banks with a national presence. To strengthen the regional presence, the minister announced that Indian Overseas Bank will continue its operations in the South, Uco Bank will keep operation in the East and the Punjab and Sindh Bank will continue with Rs 1.71 lakh crore business in the North. Announcing a positive growth in the banking system, the finance minister stressed that the gross bad loans of public sector banks have come down to Rs 7.9 lakh crore from Rs 8.65 lakh crore at December-end 2018.