The Indian government is working on a plan to significantly transform the banking sector. As part of this, the government is preparing for a major merger of banks. According to media reports, based on the recommendation of Niti Aayog, the government may merge small public sector banks with large public sector banks. As part of this major merger, the government may plan to merge Indian Overseas Bank, Central Bank of India, Bank of India and Bank of Maharashtra.
This may cause inconvenience to the customers. After the merger, they will have to prepare all the relevant documents for the new banks, which will increase their workload. However, in such situations, banks also provide convenience to the customers and try to avoid difficulties.
Which banks can be merged?
The government may merge Indian Overseas Bank, Central Bank of India, Bank of India and Bank of Maharashtra with major public sector banks like State Bank of India, Punjab National Bank and Bank of Baroda.
According to the information received, a record of the discussion regarding this proposal has been prepared. Now preparations are underway to send it to the Cabinet meeting and the Prime Minister’s Office for discussion. If everything goes well and the government gives its approval, then the mega merger of these banks will be completed in the financial year 2026-27.
What is the government’s plan?
The banking system is under increasing pressure due to rising costs of small banks and ever-increasing NPAs. Keeping this in mind, the government wants to merge banks to strengthen the banking system and prepare them to compete globally. The government believes that mergers will increase the lending capacity of banks, strengthen their balance sheets and enable more efficient operations.
The government has taken similar steps in the past. Between 2017 and 2020, the government merged 10 public sector banks to create four large banks. If the government’s merger plan is completed on time, only four public sector banks will remain in the country: State Bank of India, Punjab National Bank, Bank of Baroda and Canara Bank.
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