Mega-merger of 10 PSU Banks from 1 April: All You Need to Know
Mega-Merger of 10 PSU banks has come into effect from 1 April 2020, post-announcement by the Finance Minister Nirmala Sitharaman despite the nation-wide lockdown due to Coronavirus. The ten public sector undertaking banks (PSU) have merged into four banks on 1st April 2020, making it into four bigger and stronger banks, in continuity with its impulsion to attain Prime Minister Narendra Modi’s dream of a $5 trillion economy. The novel coronavirus pandemic effect has impacted our economy whereby the mega-merger postponement had been brought into effect by the Reserve Bank of India to make it happen on April 1, 2020.
This merger would follow the light of the amalgamation of Bank of Baroda, Vijaya Bank, and Dena Bank that happened last year. This would, in turn, bring down the headcount of 27 public sector banks in 2017 to 12 public sector banks as of now, to make the state-owned lenders global sized banks. In order to conduct the mega-bank merger, the Government of India has allocated Rs 68,855 crore towards the merger plan.
Take a look at the banks engaged in the consolidation on April 1, 2020.
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Amalgamating Banks – United Bank of India and Oriental Bank of Commerce
PSB in Rank Size – the 2nd largest public sector bank in India.
- As per the Government’s merger plan, United Bank of India and Oriental Bank of Commerce will be merged with the Punjab National Bank, combining these three will make the 2nd largest public sector bank in India.
- The Punjab National Bank will be operating with a new logo that will carry the distinct signages of all three lenders.
- The branches of United Bank of India and Oriental Bank of Commerce will operate as the combined branches of PNB.
- The 2nd largest Public sector bank(PSB) will be operating with Rs. 18 lakh crore business and will be the 2nd largest network operating with 11, 437 branches across India.
- The merger effect would set to create a high Current And Savings Account (CASA) ratio and foster a high lending capacity.
- The same core banking system(CBS), Finacle of all the three banks will now be accessed via a uniform integrated system for fast resolution of gains.
Amalgamating Bank – Syndicate Bank
PSB in Rank Size -4th largest Public sector bank
- Syndicate Bank will be merged into Canara Bank which makes the transformed bank i.e. Canara Bank the 4th largest Public sector bank with a business of Rs. 15.20 lakh crore.
- The Canara Bank will now continue to operate with 10,391 branches, 12,829 ATMs and the combined strength of 91,685 employees.
Union Bank of India
Amalgamating Bank – Andhra Bank and Corporation Bank
PSB in Rank Size– 5th largest public sector bank in India
- Union Bank of India will be merged with Andhra Bank and Corporation Bank, resulting the Union Bank to become the 5th largest public sector bank in India.
- Post-merger, all the Andhra Bank and Corporation Bank’s investment will be integrated with Union Bank of India.
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Amalgamating Bank -Allahabad Bank
PSB in Rank Size– 7th largest Public sector bank
- The Indian Bank will be merged with Allahabad Bank which makes the bank to become the 7th largest Public sector bank with a business of Rs 8.08 lakh crore.
- The Indian Bank would operate as a combined entity comprising 6, 060 branches, a network of 2,870 ATMs and a banking correspondent network of 9,000.
Results of Post Merger w.e.f 1st April 2020
- The number of public sector banks will get consolidated from 27 banks in 2017 to 12 banks in 2020.
- There will be 12 Public sector banks that consist of 6 merged banks and 6 independent public sector banks.
- 6 Merged Banks- SBI, Bank of Baroda, Punjab National Bank, Canara Bank, Union Bank of India, Indian Bank
- 6 Independent banks – Indian Overseas Bank, Bank of Maharashtra, UCO Bank, Punjab and Sind Bank, Bank of India, Central Bank of India.
The list of 12 Public sector banks i.e. Nationalised Banks with a Government shareholding percentage as on 1st April,2020:
- Bank of Baroda (63.74%)
- Bank of India (87.0535%)
- Bank of Maharashtra (87.01%)
- Central Bank of India (88.02%)
- Indian Overseas Bank (91%)
- Punjab & Sind Bank (79.62%)
- State Bank of India (61.00%)
- UCO Bank (93.29%)
- Canara Bank (72.55%)
- Indian Bank (81.73%)
- Punjab National Bank (70.22%)
- Union Bank of India (67.43%)
- The customers of all the amalgamating banks would be treated as the customers of the merged banks w.e.f 1 April 2020.
- As per the Government of India, the merger of public-sector banks will create 7 large public sector entities that will have extensive nation-wide reach with a business turnover of over Rs. 8 lakh crores(including the business of each amalgamated entity).
- The merged bank’s culture, synergies and common CBS platform mixed with the amalgamating banks will allow the fast operational gains realisation and propel the lending capacity.
- The customers will now have access to an extensive number of branches and ATM networks and next-generation banking technology. If the merged bank’s branch is operating in the same vicinity of the amalgamating bank’s branch, then the merger or shifting will happen in integration of both these two branches.
- The IFSC and MICR code applicable and the savings account operating with the amalgamating branch will be changed into the new IFSC and MICR code of the merged bank’s branch. The funds’ transfer and other financial transactions will happen via the new codes post-merger.
- The current interest rates for the fixed deposit or recurring deposit of the amalgamating banks will remain the same until maturity. The renewal of fixed deposits and recurring deposits will be done as per the latest fixed deposit interest rates of the merged bank.
- The validity of the existing credit card will remain the same until the expiry date printed on the credit card. The renewal of the expiry date of the credit card will be based on the issuance of the new credit card. The customers have to contact their amalgamating bank for the new credit card.
- The debit cards customers will not be charged any fee. For example, the debit cards of both the Allahabad Bank and the Indian Bank can be used in their respective ATMs without any charges.
- The customers will be required to change their bank account numbers and IFSC code numbers to continue their auto credits and debits facilities post seamless merger of their amalgamating banks into the merged bank’s financial system. This way, their ECS/ NACH arrangements/standing instructions for utility payments, Loan EMIs, RD Instalments, Credit Card payments and other services will continue to operate without any disruption.