Union Finance Minister Nirmala Sitharaman briefed the media on Friday afternoon making some significant announcements. Continuing with her big bang announcements to assist the economy last Friday, she made significant announcements today as well.
Sitharaman announced the merger of several banks which will bring down the number of public sector banks from 27 in 2017 to 12 two years later.
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The Oriental Bank of Commerce and United Bank will be merged with Punjab National Bank, Indian Bank will be merged with Allahabad Bank, Syndicate Bank will be merged with Canara Bank, while Andhra Bank and Corporation Bank will be merged with Union Bank of India.
The objective of the mergers, she said, was to turn them into global sized banks. “Consolidation of Bank of Baroda, Vijaya Bank and Dena Bank has brought about wide-ranging benefits,” said Nirmala Sitharaman.
She stated, “Punjab National Bank, Oriental Bank of Commerce and United Bank will be brought together and they shall form the second largest public sector bank with the business of Rs 17.95 lakh crore”. Canara Bank’s merger with Syndicate Bank will make it the fourth-largest public sector bank. The mergers are expected to help create ‘next-generation banks’. It would help India become a $5 trillion economy, she said.
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“We shall continue with 2 banks which will have a national presence, Bank of India with Rs 9.3 Lakh Crores of business size and Central Bank with Rs 4.68 Lakh Crores of business size,” added Sitharaman. “Staff should be dedicated at the branch level to make sure last Friday’s announcements are implemented and this consolidation is smoothly applied,” she stated.
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Sitharaman also told the media that in this financial year, 14 of the 18 public sector banks are in a profit-earning situation. Furthermore, she stated that the Board Committee of National Banks will appraise the performance of General Manager and above. After consolidation, boards will be given the flexibility to introduce CGMs as per business needs.
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Finance Secretary Rajeev Kumar stated, “In amalgamation process, number of banks have been brought down to 12 from 27. There has been no retrenchment so far, there is no chance of retrenchment. The benefits of employment & HR will improve, with amalgamation the best combination will be taken up.”
The finance minister asserted that no jobs will be lost and the mergers will be a significant step to bring down NPAs.