The centre on Wednesday approved a scheme for the merger of 10 Public Sector Banks into four, clearing off the doubts pertaining to any delay in the process.
The effective date for the amalgamation would from April 1, 2020. The balance sheets, as well as stocks of these lenders, will be integrated, according to the scheme of amalgamation cleared by the Union Cabinet.
Punjab National Bank (PNB), Oriental Bank of Commerce, and United Bank of India will merge to form the nation’s second-largest lender. Canara Bank and Syndicate Bank will merge and Union Bank of India is planned to be amalgamated with Andhra Bank and Corporation Bank, and Indian Bank will subsume Allahabad Bank.
The banks will come into action to take the process ahead. Initially, the swap ratio for stocks, with anchor lenders expected to call board meetings in the coming days. PNB is scheduled to hold its board meeting on Thursday.
The banks will also call for an independent committee to address the grievances of minority shareholders.
“We looked at the outcome (of the BoB amalgamation) within a short span, with an intention to understand if there are any lessons we need to learn from it and the impact on the performance. The amalgamations are being done so that customers reap benefits of larger banks. There will be more fund for credit and so on,” Sitharaman said.
After the process is complete, India will officially have 12 PSBs instead of 27 back in 2017.