A total of 10 public sector banks will be merged into four on Wednesday as part of the mega-merger announced by the government last year.
It is the biggest-ever consolidation exercise involving public sector banks to make them globally competitive, especially at a time when the sector has shown significant weakness.
Not only will the number of public sector banks reduce due to the merger, but it will also add strength to the four freshly merged banks. Six banks, which will cease to exist, will be merged with four anchor banks.
Commenting on the development, Union Bank of India Managing Director Rajkiran Rai G told news agency PTI that they do not foresee any problem and that the merger is happening as per plan.
“We don’t foresee any problem it is going as per the plan. We have reviewed in the light of this situation also. Certain modification in implementation we have done so that there is no disruption for employees and customers. We are ensuring zero disruption,” Union Bank of India Managing Director Rajkiran Rai G told PTI.
There are four anchor banks — Punjab National Bank, Union Bank, Canara Bank and Indian Bank — and six other banks which will be merged into them.
The anchor banks are postponing some part of the implementation and processes due to the lockdown.
“For merging banks, we have not changed some of the processes like loan process etc, which we proposed to do earlier. However, because of the prevailing situation we will be continuing old system till the situation comes under control,” he said.
As per Rajkiran, the bank is looking at more than Rs 2,500 crore of synergy benefits over the next three years, he added.
Mega consolidation plan
As per the plan, Oriental Bank of Commerce and United Bank of India will merge into Punjab National Bank (PNB), while Syndicate Bank will be merged into Canara Bank. Andhra and Corporation Bank will be merged into Union Bank of India and Allahabad Bank into Indian Bank.
“We have planned very well and from tomorrow onwards we will ensure that the merged entity functions more efficiently and effectively. Particularly we would ensure that customer services remain uninterrupted,” PNB MD S S Mallikarjuna Rao told PTI.
Following the consolidation, there will be seven large public sector banks (PSBs), and five smaller ones.
There were as many as 27 PSBs in 2017. The total number of public sector banks in the country will come down from 18 to 12 beginning next financial year.
Speaking on preparedness, Indian Bank MD Padmaja Chunduru said harmonisation of products — both on the loan and deposit sides — has been completed and the same products will be offered to all customers.
She also said all the deposit and loan products, including access to Indian Bank’s emergency credit lines launched in the wake of Covid-19, would be made available to the customers of Allahabad Bank.
“We have focused all our resources on the important things that matter for day one — treasury integration has happened and IT integration to the extent of product harmonisation and rolling out of the same products has happened,” she said.
She expects the entire IT integration to be completed by December 2020.
Following this merger, PNB will become second largest after the State Bank of India (SBI), Canara Bank fourth, Union Bank of India fifth and Indian Bank seventh biggest public sector lender.
Canara Bank MD L V Prabhakar said, “We are delighted that following the amalgamation as a single legal entity, we will become a powerful banking institution that is globally competitive and efficient working towards providing differentiated customer experience excellence across all our products and services.”
The combined entity will be large but with an unchanged approach to grass-root banking, customer delight, and satisfaction, Prabhakar said.
The merger will result in the creation of seven large PSBs with scale and national reach, with each amalgamated entity having business of over Rs 8 lakh crore. It would help create banks with scale comparable to global banks and capable of competing effectively in India and globally.
In addition, consolidation would provide impetus to the merged entities by increasing their ability to support larger ticket-size lending and have competitive operations by virtue of greater financial capacity.
Last year, Dena Bank and Vijaya Bank were merged with Bank of Baroda. Prior to this, the government had merged five associate banks of SBI and Bharatiya Mahila Bank with the public sector bank.
These were State Bank of Patiala, State Bank of Bikaner and Jaipur, State Bank of Mysore, State Bank of Travancore and State Bank of Hyderabad effective April 2017.
(With inputs from PTI)
Also Read | Coronavirus: Hunt intensifies for Delhi’s Nizamuddin-linked cases as tally crosses 1600 across India
Also Read | Covid-19 crisis: Odisha businessman feeds starving families of migrant workers returning to UP, Bihar
Also Watch | Migration of labourers will not be allowed: Centre to SC