(The Gist of PIB) Consolidation in Public Sector Banks [MARCH-2020]
(The Gist of PIB) Consolidation in Public Sector Banks
Consolidation in Public Sector Banks
- The amalgamation would be effective from 1.4.2020 and would result in creation of seven large PSBs with scale and national reach with each amalgamated entity having a business of over Rupees Eight lakh crore.
- The Union Cabinet, chaired by the Prime Minister has approved the mega consolidation of ten PSBs into four which include the –
- Amalgamation of Oriental Bank of Commerce and United Bank of India into Punjab National Bank
- Amalgamation of Syndicate Bank into Canara Bank
- Amalgamation of Andhra Bank and Corporation Bank into Union Bank of India
- Amalgamation of Allahabad Bank into Indian Bank
- The Mega consolidation would help create banks with scale comparable to global banks and capable of competing effectively in India and globally.
- Greater scale and synergy through consolidation would lead to cost benefits which should enable the PSBs enhance their competitiveness and positively impact the Indian banking system.
- 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.
- The adoption of best practices across amalgamating entities would enable the banks improve their cost efficiency and risk management, and also boost the goal of financial inclusion through wider reach.
- With the adoption of technologies across the amalgamating banks, access to a wider talent pool, and a larger database, PSBs would be in a position to gain competitive advantage by leveraging analytics in a rapidly digitalising banking landscape.
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