Mega bank consolidation on track; to take effect from 1 April, says finance minister Nirmala Sitharaman

New Delhi: The government on Thursday said the mega bank consolidation plan is very much on track and will take effect from 1 April despite the onslaught of coronavirus pandemic throwing the country out of gear. The Union Cabinet earlier this month approved amalgamation of 10 public sector banks into four global size lenders, beginning next financial year. Asked if the government is considering extending the deadline for the merger of public sector banks, Finance Minister Nirmala Sitharaman said “at the moment there is nothing on that”. Banking Secretary Debasish Panda said the merger process is very much on track and expressed hope that the banking sector would be able to meet the challenges thrown by the pandemic. [caption id=“attachment_7679911” align=“alignleft” width=“380”] File image of Union Finance Minister Nirmala Sitharaman. PTI[/caption] “That is very much on the track. It’’s parallel activity going on. As far as fund transfers etc are concerned, necessary arrangements will be made,” Panda said. The statement assumes significance as there has been demand from some quarters for deferring the deadline due to coronavirus outbreak. All India Bank Officers’’ Confederation (AIBOC) on Wednesday requested Prime Minister Narendra Modi to defer mega-merger exercise of banks in view of coronavirus outbreak. Banking services across the country are impacted due to COVID-19 as the lockdown is being observed across the country. Following the consolidation, there will be seven large public sector banks (PSBs), and five smaller ones. There were as many as 27 PSBs in 2017. As per the mega consolidation plan, Oriental Bank of Commerce and United Bank of India will merge into Punjab National Bank; Syndicate Bank into Canara Bank; Andhra Bank and Corporation Bank into Union Bank of India; and Allahabad Bank into Indian Bank. The merger will result in the creation of seven large PSBs with scale and national reach, with each amalgamated entity having a business of over Rs 8 lakh crore and it would help create banks with a scale comparable to global banks and capable of competing effectively in India and globally. In addition, consolidation would also provide impetus to amalgamated entities by increasing their ability to support larger ticket-size lending and have competitive operations by virtue of greater financial capacity. Last year, Dena Bank and Vijaya Bank were merged with Bank of Baroda. Prior to this, the government had merged five associate banks of SBI and Bharatiya Mahila Bank with the PSB.