Merger Of Public Sector Banks
7 April 2020: The Start of the new fiscal year 2020-21 for the banking industry brings many challenges in the near term and ample opportunities in the long term. In the Middle of the fight against the sudden global coronavirus pandemic, going ahead with the consolidation of 10 public sector banks (PSBs) into four large entities is significant.
This will go down in history for the implementation of one of the key pending recommendations of Narasimham Committee-I (1991-92). The newly-formed strong and smart PSBs should eventually be able to compete with new-generation peers. They should be able to raise the bar of performance in the inclusive journey of the banking industry.
New Pecking Order Of PSBs ( Merger Of Public Sector Banks )
Based on the business data of March 2019, State Bank of India (SBI), the banking behemoth, will lead the pack with a business of Rs 52.05 trillion.
Punjab National Bank (PNB) will be the second big PSB after its merger with Oriental Bank of Commerce (OBC) and United Bank of India (UBI). The new entity will have a business level of Rs 17.94 trillion, leaving behind Bank of Baroda in the third position with its business at Rs 16.13 trillion.
Canara Bank will stand at the fourth position commanding a business of Rs 15.2 trillion. Union Bank, Andhra Bank and Corporation Bank together will reach a size of Rs 14.59 trillion.
Indian Bank and Allahabad Bank will make another smart PSB with business standing at Rs 8.05 trillion. The historic move of consolidation can be fruitful only if the newly-formed PSBs in collaboration with regulators and government can improve the effectiveness of corporate governance.