Merger of PSU Banks

MERGER OF PSU BANKS 

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MERGER OF BANKS

Last year in August, financial minister, Nirmala Sitharaman had declared the merger of banks consisting of ten public sectors (PSU) banks into four mega state-owned ones. Merger & amalgamation occurred on the 1st of April to four mega PSU banks to make them globally strong.

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WHAT PSU MERGER IS?

In a merger, there is an anchor bank and an amalgamating bank or banks, where the latter gets unified with the former. For example,  Vijaya Bank and Dena Bank (amalgamating banks) were unified into the Bank of Baroda (the anchor bank). In outcome, the operations of Vijaya Bank and Dena Bank were handed over to Bank of Baroda. Practically, customers of the amalgamating banks are to get affected whereas customers of the anchor bank are not likely to face much change. 

CHANGES AN ACCOUNT HOLDER CAN FACE

Bank account number, customer IDs to change

In the coming days, you are likely to get a new account number and customer ID. For example, a few years ago, when five associate banks of State Bank of India (SBI) were unified, IFSC codes and names of 1,300 branches were changed. The banking system changed the names and IFSC codes of branches of the amalgamating banks located in major cities such as Mumbai, New Delhi, Bengaluru, Chennai, Hyderabad, Kolkata, and Lucknow.

PROS AND CONS OF MERGER

PROS:-

1. It lowers the cost of the policy.
2. The merger helps in economic inclusion and expanding the geographical span of the banking policy.
3. NPA and threat management are profited.
4. Merger leads to the availability of a bigger scale of skill and that helps in minimizing the scope of inefficiency which is more in small banks
5. The contrast in wages for bank staff members will get reduced. Service conditions get similar.
6. The merger sees a larger capital base and higher liquidity and that reduces the government's burden of recapitalizing the public sector banks' time and again.
7. Duplicative posts and designations can be eliminated which will guide to financial saving.

CONS:-

1.  Larger banks might be weaker to global economic problems while the smaller ones can survive
2. The merger sees the bigger banks coming under pressure because of the weaker banks.
3. The merger could only give temporary relief but not real solutions to problems like bad loans and bad governance in public sector banks
4. Coping with workers' dissatisfaction could be another challenge for the governing board of the new bank. This could lead to employment issues.

BIG BANKS WEDDINGS AND THE RISK OF  GETTING INDIA’S ECONOMY DERAILED.

Weddings expect attention, which means the focus on everything else is the least.

The government’s move to unify 10 public sector banks and form four big lenders risks dying the Indian economy of merit. That is because the management and the staff at these banks would be distracted with integration, rather than going out and giving.

The more recent merger of Vijaya Bank and Dena Bank into Bank of Baroda (BoB), hasn’t put up much hope among investors. The latter’s shares have underperformed partners in the past year.

While reviewers point out that other lenders such as SBI and private sector banks can step in to make a good shortfall, overall systemic credit expansion is unlikely to be left unharmed. Small businesses will be extremely hit.

BANKS  AMALGAMATION

The merger of United Bank of India and Oriental Bank of Commerce into Punjab National Bank

All branches of United Bank of India and Oriental Bank of Commerce has started working as branches of Punjab National Bank (PNB). The amalgamation has made PNB the second-largest nationalized bank of the country -- both in terms of business and branch network.

PNB added that all customers, including depositors, will be treated as PNB customers.

The amalgamated bank will have a wider geographical reach through 11,000 plus branches, more than 13,000 ATMs, one lakh employees and a business mix of over Rs 18 lakh crore.

Canara Bank and Syndicate Bank merger

Syndicate Bank has been merged with Canara Bank, making it the fourth-largest PSB with a business of Rs 15.20 lakh crore.

The bank will have 10,391 branches, 12,829 ATMs and the combined strength of 91,685 employees. Customers, including depositors of Syndicate Bank, will be treated as customers of Canara Bank 

Krishnan S, the executive director at Syndicate Bank has been appointed in the same portfolio at Canara Bank post-merger.

The amalgamation of Union Bank with Andhra Bank and Corporation Bank

Union Bank became the fifth largest public sector lender of the country after amalgamating with Andhra Bank and Corporation Bank. The amalgamation is also believed to create cost and revenue of Rs 2,500 crore over the next three years. To minimize disturbance, the account numbers, IFSC codes, debit/credit cards and internet/mobile banking portals and login credentials of the customers will remain the same.

"We now offer our customers much wider access to branches, ATM, digital services and credit facilities and are now in a much stronger position as a bank," Union Bank Of India managing director and CEO Rajkiran Rai G said. 

Indian Bank and Allahabad Bank

Allahabad Bank has been amalgamated into Indian Bank, making it the seventh-largest PSB in the country, with a business of Rs 8.08 lakh crore. The joint element would have 6,060 branches, a network of 2,870 ATMs and a banking correspondent network of 9,000. K Ramachandran who was the executive director of Allahabad Bank has been appointed as executive director of the Indian Bank post-merger.