Chennai: Union Finance Minister Nirmala Sitharaman has made a major announcement on State-owned banks, that will see 10 of them being merged to form four bigger lenders to strengthen a sector struggling with a bad-loan cleanup and aimed at creating lenders of global scale that can support the economy’s surge to $5 trillion by 2024. She also announced governance reforms to improve their health.
Punjab National Bank will take Oriental Bank of Commerce and United Bank of India. They will be nation’s second-largest State-owned lender overtaking Bank of Baroda. Canara Bank will absorb Syndicate Bank, while Union Bank of India will amalgamate with Andhra Bank and Corporation Bank, Indian Bank will absorb Allahabad Bank.
Bank unions opposed the mega merger of 10 State-run banks into four saying the move is bereft of logic and lacks any rationale.
“The proposals which the government has moved are unmindful since it has no logic or rationale. Neither, it is the case that a weak bank is merged with a strong one nor geographically compatible banks are being merged,” All India Bank Employees Association said in a statement. However, a few experts see it as an attempt to create next-generation banks. The move will enhance their capacity to increase credit. They will now have strong national presence and global reach.