The Indian government is planning another round of public sector bank mergers to make the banking system stronger and more efficient.
Which PSU Banks Are Set to Merge Next?
Union Bank of India and Bank of India — The government may merge these two Mumbai-based banks. If this happens, the new bank would become India’s second-largest government-owned bank, just after State Bank of India (SBI). Their combined assets would be about ₹25.67 trillion, almost as big as ICICI Bank, which has ₹26.42 trillion in assets.
Indian Bank and Indian Overseas Bank (IOB) — Both are based in Chennai, and the government is also thinking about merging them.
Punjab & Sind Bank and Bank of Maharashtra — These two smaller banks might be privatized (sold to private investors) later, instead of being merged.
Reason of Merger
Government want to reduce as many public sector banks have branches and operations in the same areas, which is inefficient. Government wants to create stronger banks that can lend more money and compete better with private banks. Secondly to simplify the public banking system i.e. from many small banks to a few large, financially stronger ones.
Between 2017 and 2020, the government already merged 10 public sector banks into 4 bigger ones, reducing the total number of state-owned banks from 27 to 12. The goal is to continue this trend, creating fewer, larger, and more powerful government banks that can handle the country’s growing financial needs.