Punjab National Bank's board has decided to give its "in-principle approval" for the merger with the Oriental Bank of Commerce and United Bank of India, the country's fourth largest bank said in a regulatory filing on Thursday. This is a part of Finance Minister Nirmala Sitharaman's announcement of a mega bank merger plan last week, which envisages the merger of 10 public sector banks into four entities, bringing down the number of state-run banks to 12.
At the board meeting this morning, the directors not only decided to commence the amalgamation process, but also approved a capital infusion of up to Rs 18,000 crore from the government for "preferential allotment of equity shares of the bank at a price determined in terms of SEBI (ICDR) Regulations". Much now rests on the Extra General Meeting (EGM) that has been scheduled for October 22 to obtain shareholders' approval.
PNB is not the only bank moving full-speed ahead on the merger plans. Heads of the 10 PSBs on the merger list met in Mumbai on Wednesday to discuss initial plans, the Business Standard reported. In fact, the concerned banks have already formed teams at the level of general managers (GMs) to ease the process of integrating products and processes.
Post the merger, PNB will emerge as the country's second-largest PSB with Rs 18 lakh crore business and second-largest branch network in India. The proposal includes merging Syndicate Bank with Canara Bank, and Indian Bank with Allahabad Bank. Moreover, Union Bank of India will take over Andhra Bank and Corporation Bank, and the merged entity will become the fifth largest bank with business of Rs 14.59 lakh crore.
The meeting of the bank heads, anchored by the finance ministry, reportedly focussed on integrating processes. "We do not want the feeling of large banks taking over control of small banks to dominate the process," bankers told the daily, adding that the best practices of various banks will be adopted to get business benefit for an organisation, post merger. The priority is minimal disruption to business and customers.
(Edited by Sushmita Choudhury Agarwal)