Indian Banking sector reforms 2020 (Amalgamation of Public Sector Banks)


Banking sector is the backbone of India’s economy. The Banking sector in India had changed a lot in the recent time, especially the Public Sector Banks (PSBs) are transforming towards digitalization to compete with private and foreign banks. The Government of India and Reserve Bank of India are closely monitoring the banks performance in the parameters like Business growth, Loan portfolios, Implementation of Government schemes, Non performing Assets (NPA), Customer Service and etc., And also government has taken various initiatives to improve the digital transactions in India.

What is the difference in Amalgamation, Acquisition and Merger?

In Merger, two or more entities combine into one entity (that may be an existing entity or creates new entity). In Acquisition one entity will purchase other entity. An Amalgamation is combining two or more entities into one with the consolidation.

Why Amalgamation or Acquisition or Merger of Banks in India?

The Amalgamation or Acquisition or Merger of Banks is a regular practice in India. The Government of India uses this Mergers or Acquisitions or Amalgamation of Banks to overcome the situations like financial crises, Lack of capital due to bad loans, to boost financial growth and economy in the country.

Merger of State Bank Associates and Bharatiya Mahila Bank with State Bank of India.

In recent times the Amalgamation or Merger of Banks has started with State Bank of India (SBI). The five associate banks of State Bank of India (SBI) and Bharatiya Mahila Bank (BMB) merged with State Bank of India (SBI) w.e.f April 1, 2017. The five associate banks are State Bank of Hyderabad (SBH), State Bank of Mysore (SBM), State Bank of Bikaner and Jaipur (SBBJ), State Bank of Travancore (SBT) and State Bank of Patiala (SBP). After this, State Bank of India became the first largest bank in India.

Amalgamation of Public Sector Banks (PSB) Phase 1

The Amalgamation of Public sector banks (PSB) started with Amalgamation of Dena Bank and Vijaya Bank with Bank of Baroda in the year 2019. This amalgamation came into effect from April 1, 2019. In this Amalgamation all 3 banks decided to take the best of three in all parameters like policies, guidelines, staff benefits and etc.,

Bank of Baroda became the largest public sector bank and also 3rd largest bank in India after State Bank of India and HDFC Bank after this amalgamation. The amalgamated entity has over 9500 branches and 13400+ ATMs and 85000+ employees.

Amalgamation of Public Sector Banks (PSB) Phase II

In September 2019, The Ministry of Finance, Government of India has announced mega amalgamation plan of 10 Public Sector Banks into 4. With this amalgamation the total number of Public sector banks consolidated to 12 from 27 in the year 2017.

 The amalgamation of the banks as follow:

  1. Oriental Bank of Commerce (OBC) and United Bank of India (UBI) were amalgamated into Punjab National Bank (PNB). Punjab National Bank became the second largest PSB after this amalgamation with a Business of Rs 17.95 lakh crore and 11400+ branch network.
  2. Syndicate Bank was amalgamated into Canara Bank to create fourth largest PSB in the country with Rs 15.20 lakh crore Business and 10,300+ branch network.
  3. Andhra Bank and Corporation Bank were amalgamated into Union Bank of India. Union Bank of India became fifth largest public sector bank in India after this consolidation. The total business increased to Rs 14.59 lakh crore with 9600+ branch network.
  4. The amalgamation of Allahabad Bank into Indian Bank made Indian Bank as the seventh largest PSB in India. After this merger the Indian Bank business increased to Rs 8.08 lakh crore with 6100+ branch network.

This amalgamation proposal was approved by the cabinet and issued government gazette in the month of March 2020. From April 1, 2020 all the amalgamated entities started working under the anchor bank with common policies and guidelines.


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