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Mega PSU banks merger comes into effect from today onwards; 6 banks cease to exist

The exercise assumes significance as it is taking place at a time when the country is under complete 21-day lockdown.

SNS | New Delhi |

Last year in August, Finance Minister Nirmala Sitharaman announced the amalgamation of 10 Public Sector Undertaking (PSU) banks into four mega state-run banks. The plan aimed to strengthen country’s financial system has come into effect from today onwards.

This is the biggest ever consolidation exercise in the public sector banking space and experts believe that it will make the four mega banks globally competitive.

The exercise assumes significance as it is taking place at a time when the country is under complete 21-day lockdown and the governments, both central and state, are fighting to contain the further spread of the COVID-19 pandemic.

Experts said merger at this point of time will not be very smooth and seamless. However, heads of the anchor banks are exuding confidence. “We don’t foresee any problem it is going as per the plan. We have reviewed in the light of this situation also. Certain modification in implementation. We have done so that there is not any disruption for employees and customers. We are ensuring zero disruption,” Union Bank of India Managing Director Rajkiran Rai G told PTI.

Under the plan, Oriental Bank of Commerce and United Bank of India will be merged into Punjab National Bank (PNB); Syndicate Bank into Canara Bank; Allahabad Bank into Indian Bank; and Andhra Bank and Corporation Bank into Union Bank of India.

Once the merger is completed, PNB will become Delhi’s SLBC convenor. At present, the responsibility falls under Oriental Bank of Commerce.

PNB will also become the State Level Bankers Committee (SLBC) convenor for the states of Tripura and West Bengal. Earlier, the responsibility was with United Bank of India.

Similarly, Andhra Pradesh too will have a new SLBC convenor which will be operated by the Union Bank of India, as Andhra Bank is being merged with the Mumbai-based lender.

Since Syndicate Bank is being acquired by the Canara Bank, its responsibilities in the southern state of Karnataka will be given to the latter.

Similarly, district lead bankers would also be revamped. As many as 111 districts will see new lead bankers beginning next fiscal.

Customers, including the depositors of all the merging banks will be treated as customers of the banks in which the merger is taking place, RBI had said previously.