Bank Mega Merger: India’s banking sector is set for another major change. The government is working on a new mega merger among public sector banks (PSBs), under which there is a plan to merge smaller public sector banks with larger banks.
According to a media report, a proposal has been prepared to merge Indian Overseas Bank (IOB), Central Bank of India (CBI), Bank of India (BOI) and Bank of Maharashtra (BoM) with larger banks like Punjab National Bank (PNB), Bank of Baroda (BoB) and State Bank of India (SBI).
What is the detail
Money Control reports, citing government officials, that the plan will be discussed at the Cabinet and Prime Minister’s Office (PMO) levels in FY27 (financial year 2026-27). The proposal will initially be placed on the “Record of Discussion,” which will form the basis for further decisions.
This move is part of the government’s long-term goal of building strong, large, and globally competitive public sector banks. Ten banks were previously merged between 2017 and 2020 to form four large banks. The government believes that given the rapidly growing digital fintech services and the expansion of private banks in India, the time has come to strategically restructure public sector banks.
What is ‘Record of Discussion’?
The “Record of Discussion” is an internal government document that records the key discussions and consensus reached during a meeting. This document is the basis for further policy approvals and decisions at the Cabinet level. The proposal will first be placed at the Cabinet level for discussion among senior officials and then sent to the Prime Minister’s Office (PMO) for consideration.
