10 public sector banks mega-merger comes into force from today: Key points bank customers must know
PSU Banks Merger: Despite nation-wide lockdown due to coronavirus announced by the Government, ten Public Sector Undertaking (PSU) banks will be merged into four banks from today, 1 April 2020. As novel coronavirus pandemic has impacted our economy, there was a dilemma on the postponement of the bank merger, however, the Reserve Bank of India cleared the air that the merger will still take place on the set date i.e. April 1, 2020.
In the statement, 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.”
This comes just after Finance Minister Nirmala Sitharaman announced that the megabank consolidation plan will be executed as planned, and will take place on April 1.
In the biggest consolidation exercise in the banking space, Finance Minister Nirmala Sitharaman in her mega plan, had announced the merger of 10 public sector lenders into four bigger and stronger banks in August 2019. Customers, including depositors of merging banks, will be treated as customers of the banks in which these banks have been merged.
With this merger, the number of public sector banks in India will come down to 12 from 27 in 2017 when the State Bank of India (SBI) took over five of its associates and Bharatiya Mahila Bank. In 2019, Vijaya Bank and Dena Bank got merged with Bank of Baroda, making it the third-largest state-run bank.
Here are key points you need to know about the mega-merger of 10 PSU banks from 1 April:
As per the plan of the merger, Punjab National Bank (PNB) will overtake the Oriental Bank of Commerce and the United Bank of India. After the merger, these three together will form the second-largest public sector bank in the country. The State Bank of India (SBI) is the country's largest state-run lender. PNB has also unveiled its new logo which will bear distinct signages of all three lenders. The branches of Oriental Bank of Commerce and the United Bank of India will operate as branches of PNB.
Syndicate Bank will merge into Canara Bank to form the fourth largest PSB with a business of Rs 15.20 lakh crore. The bank will have 10,391 branches, 12,829 ATMs and the combined strength of 91,685 employees.
Indian Bank will be merged with Allahabad Bank to become the seventh-largest PBS with a business of Rs 8.08 lakh crore. The combined entity would have 6,060 branches, a network of 2,870 ATMs and a banking correspondent network of 9,000.
Union Bank of India will be merged with Andhra Bank and Corporation Bank, making it the fifth-largest public sector bank in the country. Following the merger, all investments of Andhra Bank and Corporation Bank will come under Union Bank as a combined entity.
After the merger, there will be 12 PSUs - six merged banks and six independent public sector banks.
- Six merged banks - SBI, Bank of Baroda, Punjab National Bank, Canara Bank, Union Bank of India, Indian Bank
- Six independent banks - Indian Overseas Bank, Uco Bank, Bank of Maharashtra, Punjab and Sind Bank, Bank of India, Central Bank of India.
Most importantly, all customers, including depositors of merging banks will be treated as customers of the banks in which these banks have been merged with effect from 1 April 2020.
According to the government, the PSUs merger will create seven large public sector entities with scale and national reach -- with each amalgamated entity having business over Rs 8 lakh crore.
