Recent Merger of Banks in India

INTRODUCTION

Merger plays a very dominant role in the world of banking. It is not a new concept it's an ancient tradition.

Merger means two large companies having different identities becoming one company or two separate entities becoming a new entity. Over the past several years, the Indian banking sector has witnessed many mergers and acquisitions and these mergers and acquisitions have had a very good positive impact on the performance of financial institutions.

In the year 2019, our Finance Minister Nirmala Sitharaman announced in the Parliament House that 10 large public sector banks of India will be merged to form four large banks. With this merger, the number of public sector banks in India has reduced from 27 to 12. Now there are six consolidated banks and other sox are separate public sector banks.

The details of the 10 banks that have been merged are as follows:

1. Oriental Bank of Commerce and United Bank of India with Punjab National Bank.

2. Canara Bank with Syndicate Bank

3. Corporation Bank and Union Bank of India with Andhra Bank and

4. Indian Bank with Allahabad Bank

 

Impact of these mergers

After these mergers, Punjab National Bank became the second largest public sector bank of India, after the State Bank of India.

Union Bank of India become the fifth largest public sector bank after this merger.

Allahabad Bank will become the seventh-largest public sector bank in India.

The primary reasons for mergers of banks are:-

• Strengthening the national economy.
• Boosting the profitability of banks.
• Reducing Non-Performing Assets.
• To increase working efficiency.
• To expand the network of banks.

Author

Sarita Chouhan

HOD, Department of Commerce, VISMT