New Delhi, August 30: In her second big press meet in a week’s time to address the slowdown in the economy, Finance Minister Nirmala Sitharaman on Friday announced mega merger of public sector banks (PSB). The government had decided to merge 10 PSBs into four.
Explaining the rational behind the merger she said: “ The reason to merge banks is to have ‘global-sized banks’. The creation of next-generation banks was imperative for India to become a $5 trillion economy in the next five years.”
After these mergers, the number of PSB has come down to 12 from 27 PSBs last year.
Advertisement
After today’s announcements, Punjab National Bank is merged with Oriental Bank of Commerce and United bank of India, becoming the second-largest PSB with business size of Rs 17.94 lakh crore.
To give a fresh impetus to the ailing banks and economy she announced the merger of Canara Bank with Syndicate Bank. Following this merger, this merged entity will become a fourth largest PSB with the business of Rs 15.20 Lakh crore, third largest branch network in India with 10,342 branches.
Another big merger she announced today is of Union Bank, Andhra Bank and
Corporation bank becoming fifth largest PSB with the business of Rs 14.59 lakh crore, fourth largest branch network in India with 9,609 branches.
Advertisement
She also announced the merger of Indian Bank with Allahabad bank which would become a seventh largest PSB with business of Rs 8.08 lakh crore and will have a nationwide presence with strong networks in north, south and east.
"We shall continue with two banks, which will have a national presence - Bank of India with Rs 9.3 lakh crore of business size and Central Bank with Rs 4.68 lakh crore of business size," said Finance Minister Nirmala Sitharaman.
Apart from mergers she also announced Rs 55,250 crore upfront capital for credit growth & regulatory compliance to support the economy. PNB will get Rs 16,000 crore; Union Bank Rs 11,700 crore; Canara Bank Rs 6,500 crore; Indian Overseas Bank Rs 3,800 crore; Central Bank of India Rs 3,300 crore; Bank of Baroda Rs 7,000 crore; Indian Bank Rs 2,500 crore and Uco Bank Rs 2,100 crore.
Earlier on August 23, Sitharaman had announced a slew of measures to take the ailing Indian economy out of the gloom. The steps included an upfront release of Rs 70,000 crore to PSBs, measures to remedy the slowdown in the auto sector, improve taxes compliance, removal of increased surcharge applicable to FPIs and help MSMEs and India Inc.
Citing successful bank merger of Bank of Baroda, Dena Bank and Vijay Bank as a precedent, she said: “No retrenchment of any staff took place and best practices were implemented.”
She also said that it is the result of the government measures announced to strengthen the financial sector that bank’s NPA’s have come down from Rs 8.65 lakh crore in December 2018 to Rs 7.90 lakh crore now.
Just one email a week