New Delhi: The biggest-ever consolidation exercise in the public sector banking space effected Wednesday will mark a new dawn for the Indian banking sector, the Finance Ministry said Wednesday.
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.
“PSBs’ amalgamation today (Wednesday) will mark a new dawn for #IndianBanking. Bigger & stronger PSBs to offer faster loan processing, banking @ home, need-driven credit & specialized products for customers,” the department of financial services, which comes under Finance Ministry, said in a tweet.
The exercise assumed significance as it took place at a time when the entire country is under the grip of the COVID-19 outbreak, which has triggered a 21-day nation-wide lockdown.
Earlier in the day, Punjab National Bank (PNB) said all nation-wide branches of United Bank of India (UBI) and Oriental Bank of Commerce has started functioning as PNB branches. The merger has created the second largest nationalised bank of the country – both in terms of business and branch network after the State Bank of India (SBI). The Finance Ministry stated that this merger will certainly boost the growth of PNB.
The amalgamated bank will have a wider geographical reach through 11,000 plus branches, more than 13,000 ATMs, one lakh employees and a business mix of over Rs 18 lakh crore.
“The bigger geographical footprint will help us serve our customers more effectively and efficiently,” said PNB managing director SS Mallikarjuna Rao said.
Experts were of the opinion that merger at this point of time will not be very smooth and seamless. However, heads of the anchor banks exuded confidence.
“We don’t foresee any problem it is going as per the plan. We have reviewed in the light of this situation also. Certain modification in implementation we have done so that there is no disruption for employees and customers. We are ensuring zero disruption,” Union Bank of India MD Rajkiran Rai G stated.
The four anchor banks – PNB, Canara Bank, Union Bank and Indian Bank – are postponing some part of the implementation and processes due to the lockdown.
“For merging banks, we have not changed some of the process like loan process etc, which we proposed to do earlier. However, because of the prevailing situation, we will be continuing old system till the situation comes under control,” informed Rajkiran.
As per the mega consolidation plan announced by the Finance Ministry in August last year, Oriental Bank of Commerce and United Bank of India is merged into Punjab National Bank (PNB); Syndicate Bank into Canara Bank; Andhra Bank and Corporation Bank into Union Bank of India; and Allahabad Bank into Indian Bank.
Following the consolidation, there will be now seven large PSBs, and five smaller ones. There were 27 PSBs in 2017. The total number of PSBs in India has now come down to 12.