Mega PSB Merger Plan On The Table; Smaller Banks May Be Consolidated With Larger Lenders: Report

The renewed merger push comes even as it diverges from NITI Aayog’s earlier suggestion to privatise or restructure smaller public sector banks (PSBs) such as Indian Overseas Bank (IOB) and Central Bank of India (CBI), which were identified as potential candidates for strategic sale.

NITI Aayog had recommended that only a few large state-run lenders — SBI, PNB, BoB, and Canara Bank — be retained under government control, while the remaining PSBs should either be merged, privatised, or have their government stake reduced.

“The current plan builds on those recommendations but aligns them with today’s realities,” according to Moneycontrol. “With fintechs growing rapidly and private banks expanding their reach, the focus now is to strengthen PSBs strategically rather than keep them scattered.”

In 2020, the government had approved consolidation of ten PSBs into four, enabling creation of digitally driven consolidated banks with global heft and business synergies.

It had approved the mega consolidation of ten PSBs into four which include the –

(a)  Amalgamation of Oriental Bank of Commerce and United Bank of India into Punjab National Bank

(b)  Amalgamation of Syndicate Bank into Canara Bank

(c)  Amalgamation of Andhra Bank and Corporation Bank into Union Bank of India

(d)  Amalgamation of Allahabad Bank into Indian Bank