New Delhi/UNI: The Union Cabinet on Wednesday approved the mega consolidation of 10 PSBs into four.
It includes amalgamation of the Oriental Bank of Commerce and United Bank of India into the Punjab National Bank, amalgamation of Syndicate Bank into Canara Bank, amalgamation of Andhra Bank and Corporation Bank into the Union Bank of India and amalgamation of Allahabad Bank into the Indian Bank.
Briefing reporters here about Cabinet decisions, Finance Minister Nirmala Sitharaman said the amalgamation would be effective from April 1, 2020 and result in creation of seven large PSBs with scale and national reach, with each amalgamated entity having a business of over Rs eight lakh crore.
The mega consolidation would help create banks with scale comparable to global banks and capable of competing effectively in India and globally. The greater scale and synergy through consolidation would lead to cost benefits, which should enable the PSBs enhance their competitiveness and positively impact the Indian banking system.
In addition, consolidation would also provide impetus to amalgamated entities by increasing their ability to support larger ticket-size lending and have competitive operations by virtue of greater financial capacity.
The adoption of best practices across amalgamating entities would enable the banks improve their cost efficiency and risk management, and also boost the goal of financial inclusion through wider reach.
Further, with the adoption of technologies across the amalgamating banks, access to a wider talent pool and a larger database, the PSBs would be in a position to gain competitive advantage by leveraging analytics in a rapidly digitalising banking landscape.