Mega-Consolidation:10 PSU Banks  Merger Into 4, Effective From Today

1 Apr, 2020 11:23 IST|Sakshi
4 New PSUs-PNB, Canara Bank, Union Bank and Indian Bank

NEW DELHI: The biggest-ever consolidation exercise in the public sector banking space is slated to take shape on Wednesday when six PSU lenders will be merged into four in a bid to make them globally competitive.

The exercise assumes significance as it is taking place at a time when the entire country is under the grip of the COVID-19 outbreak, which has triggered a 21-day lockdown.

Experts said 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 Managing Director Rajkiran Rai G said.

"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," he said. With the merger, the bank is looking at more than Rs 2,500 crore of synergy benefits in the next three years, he added.

"We have planned very well and from tomorrow onwards we will ensure that the merged entity functions more efficiently and effectively. Particularly we would ensure that customer services remain uninterrupted," PNB MD S S Mallikarjuna Rao said. The bank will be working very hard to create an edifice properly for enhancing the strength of the bank, he said.

There were as many as 27 PSBs in 2017. The total number of public sector banks in the country will come down from 18 to 12 beginning next financial year.

Speaking on preparedness, Indian Bank MD Padmaja Chunduru said harmonisation of products -- both on the loan and deposit sides -- has been completed and the same products will be offered to all customers.

She also said all the deposit and loan products, including access to Indian Bank's emergency credit lines launched in the wake of COVID-19 would be made available to the customers of Allahabad Bank.

"We have focused all our resources on the important things that matter for day one -- treasury integration has happened and IT integration to the extent of product harmonization and rolling out of the same products has happened," she said. She expects the entire IT integration to be completed by December 2020.

Following this merger, PNB will become second largest after the State Bank of India (SBI), Canara Bank fourth, Union Bank of India fifth and Indian Bank seventh biggest public sector lender.

Canara Bank MD L V Prabhakar said, "We are delighted that following the amalgamation as a single legal entity, we will become a powerful banking institution that is globally competitive and efficient working towards providing differentiated customer experience excellence across all our products and services." The combined entity will be large but with an unchanged approach to grass-root banking, customer delight, and satisfaction, Prabhakar said.

The merger will result in the creation of seven large PSBs with scale and national reach, with each amalgamated entity having business of over Rs 8 lakh crore. It would help create banks with scale comparable to global banks and capable of competing effectively in India and globally.

In addition, consolidation would provide impetus to the merged entities by increasing their ability to support larger ticket-size lending and have competitive operations by virtue of greater financial capacity.

Last 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 public sector bank effective from April 2017.These were State Bank of Patiala, State Bank of Bikaner and Jaipur, State Bank of Mysore, State Bank of Travancore and State Bank of Hyderabad.(PTI)

Also Read: Vijaya Bank, Dena Bank To Become BoB From Apr 1

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