GOI’s Mega Bank Consolidation to come into effect from 1st April 2020

Mega Bank Consolidation

The government of India’s (GOI) ambitious Mega Bank Consolidation plan is on schedule. Under this plan, the government is to consolidate 27 Public Sector Banks (PSBs) into 7 large ticket PSBs and 5 smaller tickets PSBs. Post consolidation of banks, the seven large tickets PSBs will have business of Rs. 8 lakh crore each and will have scale comparable to global banks. The consolidated banks will be better equipped to compete with global banks, both in domestic as well as international markets. Consolidated PSBs will have a larger lending capacity and enhanced operational capability.

Under the Mega Consolidation Plan various small size PSBs will be merged into a large ticket PSB. Oriental Bank of Commerce and the United Bank of India will be merged into Punjab National Bank, whereas Syndicate Bank will consolidate with Canara Bank. Also, Andhra Bank and Corporation Bank will be merged into Union Bank of India and Allahabad Bank will be merged into Indian Bank. In 2019, Dena Bank and Vijaya Banks were merged into Bank of Baroda and erstwhile GOI had merged five associated banks of SBI and Bhartiya Mahila Bank into the PSB.

All India Bank Officer’s Confederation (AIBOC) had requested the Prime Minister to defer the Mega consolidation of banks, citing the reason increase in working load due to the COVID-19 outbreak. Though the Finance Minister has confirmed that the consolidation plan is on schedule and shall come into effect from 1st April 2020. Banking Secretary Mr. Debasish Panda has also confirmed that the merger plan is progressing as per the schedule and he hoped that banks will be able to meet the challenges in these trying times. 

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