Newdelhi:30/8/19:The government today announced the merger of ten public sector banks into four banks. It announced the merger of Oriental Bank of Commerce and United Bank with Punjab National Bank as well as the merger of Canara Bank and Syndicate Bank.
The merger of Union Bank of India, Andhra Bank and Corporation Bank and the consolidation of Indian Bank with Allahabad Bank was also announced. Briefing media in New Delhi, Finance Minister Nirmala Sitharaman while announcing mega state-run bank consolidation plan, said that government wants a strong financial system to make the country a five trillion economy.
She said, the merger of PNB, Oriental Bank of Commerce, United Bank will form the second-largest public sector bank with 17.95 lakh crore rupees business.
She said, the consolidation of Canara Bank and Syndicate Bank will make the 4th largest public sector banks. The merger of Union Bank, Andhra Bank and Corporation bank will form India’s 5th largest public sector bank with 14.59 lakh crore rupees business. She said, Bank of India, Central Bank of India will continue to be as public sector banks.
The consolidation of Indian Bank with Allahabad Bank will become the 7th largest bank with the business of about eight lakh crore rupees. SBI continues to be the biggest bank of the country while Bank of Baroda continues to be the third-largest.
The Finance Minister said, after today’s announcement about the merger of banks, the country will now have 12 public sector banks instead of 27. She said, the profitability of public sector banks has improved and total gross non-performing assets have come down to 7.9 lakh crore rupees in March this year from 8.65 lakh crore rupees in December last year.
The Minister also said that to avoid fugitive Nirav Modi like frauds in the PSBs, the SWIFT messaging system has now been linked with the core banking system. She also clarified that no retrenchment has taken place post-merger of Bank of Baroda, Dena Bank and Vijaya Bank and staff has been redeployed and best practices in each bank have been replicated in others.
Ms Sitharaman also unveiled governance reforms in public sector banks, saying their boards will be given autonomy and enabled to do succession planning. She said, bank boards will be given the flexibility to fix the sitting fee of independent directors adding that non-official directors will perform role analogous to independent directors.
She said, post-consolidation, boards will be given the flexibility to introduce chief general manager level as per business needs and they will also recruit chief risk officer at market-linked compensation to attract the best talent. Ms Sitharaman said, there is a need to strengthen the foundation of the banking sector. She said, the government is taking steps to clear the path to achieve five trillion dollar economy and reforms will fundamentally reboot Public Sector Banks functioning.
The Finance Minister said, the government is trying to build next-generation banks and eight PSBs have launched repo-linked loans in last one week. Ms Sitharaman said, there will be no interference in the bank’s commercial decisions. She said, loans above 250 crore rupees are being closely monitored.