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What is Merger?

The mechanism by which two or more corporations plan to combine to become a single entity, frequently with a new name, rather than remaining independently owned, and run, is known as a merger.

The integration aids in the reduction of weaknesses and the acquisition of a strategic advantage in the industry. During a merger, the combining firms exchange information about debt, finances, technology, and properties, among other things.

Latest List of Merger of Banks in India

Here are some of the recent banking mergers in India, and the ones that are the most evident. The government had announced there would be Public Sector Bank Merger, and after the merger, there are now 12 public sector banks. Different mergers of public sector banks came into action in 2020. Ten PSU banks were amalgamated into four banks. 

Punjab National Bank

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Oriental Bank of Commerce

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United Bank of India

The Punjab National Bank combines the Oriental Bank of Commerce (OBC) and the United Bank of India (UBI) (PNB). As a result of this merger, the PNB will now be India’s second-largest public sector bank in terms of branch network, after the State Bank of India. There will be 11,437 outlets, and the PNB’s overall business will be Rs. 17.95 lakh crore.
Syndicate Bank

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Canara Bank

Canara Bank and Syndicate Bank are combined. Canara Bank will become India’s fourth-largest public sector bank after this merger. With a branch strength of 10,342, Canara’s overall company will be worth 15.20 lac crore. Thanks to network overlap, this integration would lower operating costs. Since these two banks have identical work cultures, a seamless integration should be possible.
Andhra Bank

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Corporation Bank

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Union Bank of India

Union Bank of India merges Andhra Bank and Corporation Bank. Union Bank of India will become the fifth-largest public sector bank in India as a result of this merger. This acquisition has the potential to raise the business of the post-merger bank by 2-4.5 times. Union Bank of India’s gross business will be Rs. 14.59 lac crore after the merger, with a total of 9,609 branches.
Allahabad Bank

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Indian Bank

The Indian bank will be combined with Allahabad Bank in the fourth merger. Allahabad Bank will become India’s seventh-largest public sector bank after the merger. The overall company of Allahabad bank after the merger will be Rs. 8.08 lac crore, with 6,104 branches. As a result of the integration of the two banks, the size of their company will double, increasing their global competitiveness.

Terms after PSU Banking Mergers in India

  • With impact from April 1, 2020, clients of combining banks, including depositors, will be regarded as customers of the banks into which they have been consolidated.
  • There will be 12 PSUs after the merger: six consolidated banks and six separate public sector banks.
  • The Oriental Bank of Commerce and the United Bank of India started to serve as Punjab National Bank branches (1st April 2020).
  • On April 1, 2020, Syndicate Bank became a branch of Canara Bank.
  • All other branches of the Allahabad Bank will be considered as Indian Bank branches.
  • With effect from 1st April 2020, all Andhra Bank and Corporation Bank branches started to operate as Union Bank of India branches.

Benefits of Bank Mergers and Acquisitions

Benefits of Bank Mergers: Benefits to Banks through Mergers:
  • A bank merger allows the company to grow rapidly and attract a vast number of new clients all at once. An acquisition not only provides the bank with more money to deal with in terms of credit, and it will be able to accomplish the development objectives more quickly this way.
  •  Acquisitions also enable to see and scale the bank more effectively, not only in terms of efficiency but also in terms of banking operations. It will be a bank that has regulatory, risk management, accounting, operations, and IT technology in place.
  • Bank mergers and acquisitions give the company the ability to bridge product and technological differences. It’s often cheaper to buy a smaller bank with a unique sales model or financial offering than it is to start from scratch.
  • The acquisition will help to bolster the sales force or reinforce the top management team, and this human aspect should not be overlooked or minimized.
  • The credit capability of public sector banks will grow as a result of these mergers, and their balance sheets will be strengthened.
  • These large banks will be able to operate on a global scale and improve their operating performance by lowering their credit costs.
  • To turn India into a $5 trillion economy, it will need massive investment. If banks have enough funds to finance large programs, the country’s economic growth will accelerate.
  • The merger would aid in improved banking capital management.

Bank Mergers in India – FAQs

Q1. Is Bank Merging good for the economy?

Banking merging can turn India into a $5 trillion economy, with the massive amount of investment that comes in.

Q2. Is the banking mergers in India a new concept?

No. The first bank merger happened in 1921 by the Bank of Bengal, Bank of Bombay, and the Bank of Madras, which is now the State Bank of India.

Q3. Is bank merging good for the economy?

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Yes. It provides a significant reduction in transaction costs, better services to customers, and diversifies risks.

Q4. When did the most recent bank merger happen in India?

The most recent merger bank was brought into action on the 1st of April 2020 to 10 public sector banks.

Q5. Why are banks getting merged?

The primary logic behind merging banks is to increase the global competitiveness of the Indian Banks.

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