10 public sector banks to be merged
Big banks will have enhanced credit capacity and global
31/08/2019, SPECIAL CORRESPONDENT,NEW DELHI
In what comes as the second wave of the government’s efforts to revive the economy, Finance Minister Nirmala Sitharaman on Friday announced a slew of banking reform measures, including merger of 10 public sector banks into four entities. This would take the number of banks in the country from 27 in 2017 to 12, Ms. Sitharaman said.
These bank mergers, and the ones already carried out, will lead to the creation of big banks with an enhanced capacity to give credit, she said. These big banks, she said, would also be able to compete globally and increase their operational efficiency by reducing their cost of lending.
“We have chosen these banks for the mergers on the basis of ensuring that there is no disruption in the banking services, and that the banks should benefit from increased CASA [current account savings account] and greater reach,” Ms. Sitharaman said. “The banks that are being merged with each other run the same or very similar platforms, and so there will be no disruption in their activities.”
The largest of the mergers announced is that of Punjab National Bank with Oriental Bank of Commerce and United Bank. The amalgamated entity — to be called Punjab National Bank — will become the second-largest public sector bank in India, after the State Bank of India. It will also become the second-largest bank in India in terms of its branch network, with a combined total of 11,437 branches.
The second merger announced was that of Canara Bank and Syndicate Bank, which would render the merged entity the fourth-largest public sector bank. The merger also has the potential to lead to large cost reductions due to network overlaps, Ms. Sitharaman said, adding that the similar business cultures of the two banks would also facilitate a smooth transition.
The third merger is of Union Bank of India with Andhra Bank and Corporation Bank, the Finance Minister said, which would make the merged entity the fifth largest public sector bank. This merger would have the potential to increase the post-merger bank’s business by 2-4.5 times, she added.
Big banks will have enhanced credit capacity and global
competitive edge, says Nirmala Sitharaman
31/08/2019, SPECIAL CORRESPONDENT,NEW DELHI
In what comes as the second wave of the government’s efforts to revive the economy, Finance Minister Nirmala Sitharaman on Friday announced a slew of banking reform measures, including merger of 10 public sector banks into four entities. This would take the number of banks in the country from 27 in 2017 to 12, Ms. Sitharaman said.
These bank mergers, and the ones already carried out, will lead to the creation of big banks with an enhanced capacity to give credit, she said. These big banks, she said, would also be able to compete globally and increase their operational efficiency by reducing their cost of lending.
“We have chosen these banks for the mergers on the basis of ensuring that there is no disruption in the banking services, and that the banks should benefit from increased CASA [current account savings account] and greater reach,” Ms. Sitharaman said. “The banks that are being merged with each other run the same or very similar platforms, and so there will be no disruption in their activities.”
The largest of the mergers announced is that of Punjab National Bank with Oriental Bank of Commerce and United Bank. The amalgamated entity — to be called Punjab National Bank — will become the second-largest public sector bank in India, after the State Bank of India. It will also become the second-largest bank in India in terms of its branch network, with a combined total of 11,437 branches.
The second merger announced was that of Canara Bank and Syndicate Bank, which would render the merged entity the fourth-largest public sector bank. The merger also has the potential to lead to large cost reductions due to network overlaps, Ms. Sitharaman said, adding that the similar business cultures of the two banks would also facilitate a smooth transition.
The third merger is of Union Bank of India with Andhra Bank and Corporation Bank, the Finance Minister said, which would make the merged entity the fifth largest public sector bank. This merger would have the potential to increase the post-merger bank’s business by 2-4.5 times, she added.
No comments:
Post a Comment