The Centre will likely notify the merger of 10 public sector banks to create four big banks this week. Once notified, board members of these banks will give their approval swap ratio for the mergers. Each bank is required to follow regulatory norms to protect minority stakeholders' interests. Reports say all 10 banks will complete the merger process by April.
"We are expecting the government to notify the merger this week," United Bank of India managing director Ashok Kumar Pradhan said, The Economic Times reported.
In the biggest consolidation exercise in the banking space, the government on August 30 last year announced four major mergers of public sector banks, bringing down their total number to 12 from 27 in 2017. The move was aimed at making state-owned lenders global sized banks.
United Bank of India and Oriental Bank of Commerce will be merged with Punjab National Bank, making the proposed entity the second largest public sector bank (PSB). Syndicate Bank will be merged with Canara Bank, while Allahabad Bank will be amalgamated with Indian Bank. Similarly, Andhra Bank and Corporation Bank will be consolidated with Union Bank of India.
Post the consolidation, Punjab National Bank will have a business size of Rs 17.94 lakh crore, becoming the second-largest PSB after SBI with a business of Rs 52.05 lakh crore. The consolidated Canara Bank will be the fourth-largest bank with a business of Rs 15.2 lakh crore, followed by Union Bank of India at Rs 14.59 lakh crore. After subsuming Allahabad Bank, Indian Bank will be the seventh-largest state-lender with business size of Rs 8.08 lakh crore.
Bank of Baroda, after the merger with Vijaya Bank and Dena Bank, had become the country's third-largest bank. It has a business of Rs 16.13 lakh crore.