Mergers in the banking sector are driven by the need to:
- Enhance operational efficiency by consolidating resources.
- Strengthen financial stability and reduce Non-Performing Assets (NPAs).
- Achieve economies of scale to compete globally.
- Improve customer service with better digital infrastructure.
In India, public sector banks have been merging to create larger, stronger entities that can effectively manage the challenges of a growing economy. Let’s explore the recent mergers in detail.
Recent Banking Mergers in India
Since 2017, the Indian government has undertaken significant consolidation in the public sector banking space. Here’s a detailed list:
1. State Bank of India (SBI) and Associates
- Date: April 1, 2017
- Merger Details: SBI merged with five of its associate banks and Bharatiya Mahila Bank.
- Impact:
- SBI became one of the largest banks globally.
- Enhanced its customer base and branch network.
| Merged Banks | Details |
|---|---|
| State Bank of Bikaner & Jaipur (SBBJ) | Strengthened presence in Rajasthan |
| State Bank of Hyderabad (SBH) | Expanded coverage in Telangana |
| State Bank of Travancore (SBT) | Deepened reach in Kerala |
| State Bank of Mysore (SBM) | Enhanced network in Karnataka |
| State Bank of Patiala (SBP) | Strengthened operations in Punjab |
2. Bank of Baroda, Vijaya Bank, and Dena Bank
- Date: April 1, 2019
- Merger Details: Vijaya Bank and Dena Bank merged into Bank of Baroda.
- Impact:
- Created India’s second-largest public sector bank.
- Improved access to capital and technology.
3. The Big Consolidation (2019-2020)
This was a landmark event where 10 public sector banks were merged into 4 mega entities.
| Anchor Bank | Merged Banks | Ranking Impact |
|---|---|---|
| Punjab National Bank (PNB) | Oriental Bank of Commerce, United Bank of India | Became India’s second-largest PSB |
| Canara Bank | Syndicate Bank | Emerged as a technology-driven entity |
| Union Bank of India | Andhra Bank, Corporation Bank | Enhanced regional presence |
| Indian Bank | Allahabad Bank | Strengthened operations in the east |
List of Public Sector Banks (PSBs) Ranked by Size
Here is the latest ranking of public sector banks in India based on total assets, branch network, and market presence:
| Rank | Bank Name | Key Highlights |
|---|---|---|
| 1 | State Bank of India | India’s largest bank; global presence; leader in digital banking innovations |
| 2 | Punjab National Bank | Robust network post-merger; strong in northern India |
| 3 | Bank of Baroda | Known for its corporate banking and international operations |
| 4 | Canara Bank | Strong in technology and rural banking |
| 5 | Union Bank of India | Excellent regional reach, especially in southern India |
| 6 | Indian Bank | Dominates eastern India; merged with Allahabad Bank |
| 7 | Central Bank of India | Among the oldest banks; significant rural presence |
| 8 | Bank of India | Strong international presence; diverse portfolio |
| 9 | Indian Overseas Bank | Focused on retail and NRI banking |
| 10 | UCO Bank | Specialized in government schemes and rural initiatives |
| 11 | Bank of Maharashtra | Leading bank in Maharashtra; focus on MSME lending |
| 12 | Punjab & Sind Bank | Small but efficient; significant presence in Punjab |
Impact of Recent Banking Mergers
Banking mergers have several advantages, but they also come with challenges. Here’s a summary:
| Advantages | Challenges |
|---|---|
| Better capital base to fund large projects | Integration of workforce and systems is complex |
| Improved risk management and reduced NPAs | Cultural differences between merged entities |
| Enhanced technological capabilities | Risk of branch closures affecting rural customers |
| Streamlined banking structure | Temporary disruptions in customer service |