Nirmala Sitharaman, the Finance Minister of India, on the 30th of August, announced the merger of 12 State run banks to boost the economy of India.
Ms. Sitharaman addressed a press conference and said, “Punjab National Bank, Oriental Bank of Commerce and United Bank will be brought together and they shall form the second largest public sector bank with the business of Rs 17.95 lakh crores”
With the merger of the State run banks, there will be 12 public sector undertaking (PSU) banks instead of the existing 27.
In order to earn a huge profit and strengthen the PSU banks, the Finance Ministry took the decision to merge the banks.
Deven Choksey, an investment manager, said, “This is a much awaited and a step in the right direction in order to consolidate the size of the banks and improve the efficiency. The move can also help expand the size of the economy.”
Rajeev Kumar, the Secretary of the Finance Department, said, “The $ 5 trillion economy goal will be achieved through reforms, financial strength, technology, consolidation and strong governance. Rs. 55,250 crores upfront capital for credit growth and regulatory compliance to support (the) economy.”
The step is expected to enhance the condition of banks and provide better appraisals and profits to the employees. The Board Committee of National Banks will also give an appraisal to the General Managers and officials at higher posts.
The PSU banks which will be merged are Indian Bank and Allahabad Bank; Union Bank, Andhra Bank and Corporation Bank; Canara Bank and Syndicate Bank and Punjab National Bank, Oriental Bank of Commerce (OBC) and United Bank.
However, the Bank of India and the Central Bank will remain national banks. Ms. Sitharaman said, “We shall continue with 2 banks which will have a national presence – Bank of India with Rs 9.3 lakh crores of business size and Central Bank with Rs 4.68 lakh crores of business size.”
The Finance Department will also recruit a Chief Risk Officer, who will be responsible for attracting the best talent to the banks and will observe the market.
With the big merger announcement, Finance Minister Nirmala Sitharaman concluded the press conference.
Stay tuned for further updates.
