The biggest-ever consolidation exercise in the public sector banking space is marked as a new dawn in the Nation’s banking segment. Six public sector banks (PSBs) namely Oriental Bank of Commerce, United Bank of India, Syndicate Bank, Andhra Bank, Corporation Bank, and Allahabad Bank lost their individual identity as they were merged into four bigger lenders with the objective to make them globally competitive.
In terms of business and branch network, this merger has developed the second largest nationalised bank of India after the State Bank of India. Earlier there were 27 PSBs in the year 2017. The consolidation has brought down the total number of public sector banks to 12. Punjab National Bank also claimed that all nation-wide branches of United Bank of India and Oriental Bank of Commerce would be working as PNB branches.
The amalgamation of public sector banks would surely strengthen the entities. These can be seen as strategically positive steps, however, this decision might impact near term operations and growth. This step can emerge as milestone for long-term growth as it would decline the inefficient use of capital allotted by the government. Operating redundancies can be vanished while cost productivity can be enhanced with time. A bulk of the budgeted Rs 70,000 crore would now be allocated to the merged banks to help them proliferate while discovering synergies.
Newly expanded PSBs will offer faster loan processing and banking services at home, need-driven credit & specialized products for customers.
The Department of Financial Services announced this via tweet. This move is assumed significant because it is executed during the lockdown amidst COVID-19 outbreak.