Finance Minister announces mega merger of 10 PSU banks

New Delhi: In a major decision, Finance Minister Nirmala Sitharaman announced on Friday the government's plan to merge 10 PSU banks to form four robust lenders. Addressing a press conference, Sitharaman said that after the merger, India will have a total of 12 public sector banks, instead of 27.

The mergers

Sitharaman said that Punjab National Bank, Oriental Bank of Commerce and United Bank will be merged to form India's second-largest public sector lender with a business of Rs 17.95 lakh crores. Also, Canara Bank will be merged with Syndicate Bank to form the fourth-largest public sector bank with a business of Rs 15.20 lakh crores.

The merger of Union Bank of India with Andhra Bank and Corporation Bank will yield the fifth-largest PSU bank. And Indian Bank will be merged with Allahabad Bank to form the seventh-largest lender in the PSU bank ecosystem with a business of Rs 8.08 lakh crore.

Two banks will have national presence

The minister said that there will be two banks that 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.

The backdrop

The announcements come a week after Sitharaman unveiled a number of reforms to address investor concerns and boost the economy. At the time, she had said that the government would release Rs 70,000 crores for bank capitalisation. This amount is to be released upfront. In addition, Sitharaman had also announced additional lending and liquidity to the tune of Rs 5 lakh crores to PSBs.