Bigger, better

Consolidation of state-owned banks is an ambitious step. Its success will hinge on stronger central bank, governance reforms

bank merger, indian economy, banking sector, oriental bank, ubi, nirmala sitharaman, nirmala sitharaman announcement, indian express — Oriental Bank of Commerce and United Bank of India will be merged with Punjab National Bank, making it the second largest bank in the country.

Almost three decades after the M Narasimham Committee first recommended a redrawing of India’s banking landscape, the NDA government on Friday announced a big and bold step to consolidate state-owned banks. According to the mega merger plan unveiled by the finance minister, Nirmala Sitharaman, Oriental Bank of Commerce and United Bank of India will be merged with Punjab National Bank, making it the second largest bank in the country, while the south-based Canara Bank and Syndicate Bank will become one entity which will make it the third largest local lender, besides an amalgamation of Andhra Bank and Corporation Bank with Union Bank of India and Allahabad Bank with Indian Bank. This comes on top of the merger of associate banks of the SBI with the parent bank, and that of Vijaya Bank and Dena Bank with Bank of Baroda during the Narendra Modi government’s first term, thus pruning the number of government banks to a dozen.