The Indian government’s ongoing banking sector consolidation push appears to be advancing with preparations to merge Union Bank of India and Bank of India into a single large public sector bank. Sources familiar with the discussions say due diligence and internal alignment work is underway, with some officials suggesting the deal could be finalised by the end of this calendar year, 2026.
Creating a Larger Lender
If completed, the merger would combine the operations, assets and networks of two long-established state-run banks. The new entity would rank among the largest public sector banks (PSBs) in India, expanding its balance sheet significantly and increasing its footprint across urban and rural markets. Analysts note that such consolidation aligns with earlier merger rounds that reduced the number of standalone PSBs while enhancing scale.
With combined assets estimated at around ₹25.4 lakh crore in the financial year 2024–25, the merged bank would likely become the second-largest public sector lender after State Bank of India and one of the biggest banks overall by size and reach.
Why the Merger Is Being Considered
Bank consolidation has long been part of the government’s drive to strengthen financial stability, improve efficiency and reduce operational duplication among state-run lenders. Previous rounds of mergers have aimed to better capitalise PSBs, improve lending capacity, and enhance competitiveness with private sector and foreign banks. Combining two major banks could lead to greater capital depth, broader products and services, and improved cost synergies.
Policymakers have also signalled interest in further consolidations or reforms as part of broader banking sector restructuring to create globally competitive and resilient institutions.
What to Expect Next
At this stage, both banks are conducting detailed due diligence and integration planning, including evaluating technology systems, operational processes and workforce alignment. Key steps before formal approval will include finalising merger terms, regulatory clearances, and government notifications. If all goes according to current indications, the process could be completed by late 2026.
Customers and investors are expected to receive formal communication once official announcements are made, though integration efforts typically aim for minimal disruption to existing services and accounts during the transition.
