10 Public Sector Banks To Be Merged Into Four Entities, Says FM
Finance Minister Nirmala Sitharaman on Friday announced the merger of 10 public sector banks into four entities.
Similarly, Indian Bank and Allahabad Bank will become one entity to create the 7th largest public sector bank with Rs 8.08 lakh crore business. The Finance Minister further said that the Bank of India and Central Bank of India would remain independent. After the amalgamation, only 12 PSBs will be left in India from the 27 earlier.
The finance minister also said banks will be provided adequate capital. Last week, she had announced that the Rs 70,000 crore capital infusion for PSBs for the current fiscal would be front-loaded.
Financial Services Secretary Rajiv Kumar, who was also present at the press conference, said there was no retrenchment in the past consolidations, including of SBI, and service conditions of employees improved. "Employees will only benefit with the mergers," he added.
Earlier this year, Dena Bank and Vijaya Bank were merged with Bank of Baroda. Prior to this, the government had merged five associate banks of SBI and Bharatiya Mahila Bank with the State Bank of India.
Indian Overseas Bank, UCO Bank, Bank of Maharashtra and Punjab and Sind Bank will continue to function as earlier as they have strong "regional focus", Sitharaman added.
After the mergers, the country will have 12 public sector banks, including State Bank of India and Bank of Baroda. Also, Indian Overseas Bank, Uco Bank, Bank of Maharashtra and Punjab and Sind Bank, which have a strong regional focus, will continue as separate entities. The finance minister also unveiled governance reforms in public sector banks, saying their boards will be given autonomy and enabled to do succession planning.
Also, bank boards will be given the flexibility to fix the sitting fee of independent directors, she said, adding that non-official directors will perform role analogous to independent directors.
(With inputs from PTI)
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