FM: Bank merger on course
The Union Cabinet has approved the mega consolidation of 10 Public Sector Banks into four from 1 April 2020, creating the strongest banking network out of the current financially-strapped system.
The amalgamation covers Oriental Bank of Commerce and United Bank of India into Punjab National Bank, Syndicate Bank into Canara Bank, Andhra Bank and Corporation Bank into Union Bank of India and Allahabad Bank into Indian Bank.
This would result in creation of seven large PSBs with scale and national reach with each amalgamated entity having a business of over Rs.8 lakh crore.
“The banks’ merger is on course and decisions have already been taken by the respective bank boards,” Finance Minister Nirmala Sitharaman said, expecting no regulatory issues on the amalgamation.
India, in its efforts to be a globally leading economy, needs a world-class banking system. But the government has been facing increasing challenges in building a banking system that could support trillion- dollar development of the economy, financial observers said on 4 Mar 2020.
The consolidated banks would emerge as globally competitive and a strong infrastructure financiers for the country.
The amalgamated entities are expected to support larger ticket-size lending and have competitive operations by virtue of greater financial capacity, said Press Information Bureau on 4 Mar 2020.
The pressure on these enlarged capacity banks would be to adopt best practices and improve their cost efficiency and risk management.
Further, with the adoption of technologies across the amalgamating banks, access to a wider talent pool, and a larger database, PSBs would be in a position to gain competitive advantage by leveraging analytics in a rapidly digitalising banking landscape. fiinews.com
