No New PSB Mergers in the Pipeline
Minister of State for Finance Pankaj Chaudhary has confirmed that the government is not considering new mergers of public sector banks. This statement came in response to a question raised in the Rajya Sabha, where he categorically replied, “No sir.”
Strengthening Public Sector Banks
Chaudhary highlighted the government’s ongoing efforts to bolster the financial health of PSBs. The reforms implemented have introduced systemic improvements and strict controls aimed at reducing excessive financial stress within the banking sector.
These measures have also helped improve key financial indicators, including capital adequacy ratios and gross non-performing assets (NPAs), especially after the previous rounds of PSB mergers.
Impact of Previous PSB Mergers
The most extensive consolidation in the Indian banking sector occurred in 2019, when the government reduced the number of PSBs from 27 in 2017 to 12 by 2020. Key mergers included:
- Punjab National Bank absorbed United Bank of India and Oriental Bank of Commerce.
- Canara Bank merged with Syndicate Bank.
- Indian Bank integrated with Allahabad Bank.
- Union Bank of India incorporated Andhra Bank and Corporation Bank.
Earlier, Dena Bank and Vijaya Bank merged with the Bank of Baroda, while the State Bank of India consolidated with five of its associate banks and the Bharatiya Mahila Bank.
Benefits of Consolidation
Chaudhary noted that these mergers have resulted in improved synergies, economies of scale, and better integration of technology. The consolidation has uniformly enhanced all critical financial metrics across merged entities, paving the way for stronger and globally competitive banks.
Focus on Systemic Reforms
With no new mergers planned, the government’s priority remains implementing systemic reforms to ensure the resilience and growth of public sector banks. These efforts are expected to sustain the positive trajectory of India’s banking sector.
4o
