Bank Merger News : The Central Government is once again preparing for significant reforms in the banking sector. Reports suggest that the government is considering the merger of six major public sector banks (PSU banks), either with each other or with larger banks. This discussion has gained momentum as the government aims to create a few large Indian banks that can secure a place among the world’s top 100 banks.
India’s largest public sector bank, State Bank of India (SBI), also supports the idea of building bigger banks in the future, as this would help increase market value and global influence. At present, a decision regarding six PSU banks is still pending, and discussions are ongoing.
The primary objectives of bank mergers include strengthening financial stability, reducing Non-Performing Assets (NPAs), expanding digital banking services, and enhancing the global competitiveness of Indian banks.
Bank Merger News : Banks Under Consideration for the Next Merger
The banks currently being discussed for potential mergers include:
- Bank of India
- Indian Overseas Bank
- Central Bank of India
- Bank of Maharashtra
- UCO Bank
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Punjab & Sind Bank
Some of these banks may merge with one another, while others could be absorbed into larger public sector banks.
History of Bank Mergers in India Since 1993
India has witnessed several major bank mergers since 1993. Over the past three decades, the banking system has undergone significant transformation. The strategy of merging smaller banks into larger and stronger institutions has helped improve capital strength, adopt better technology, reduce risks, and cut costs caused by overlapping branches.
Major Bank Mergers in Recent Years
SBI Merger (April 2017)
In April 2017, SBI merged its six associate banks with itself. These included:
- State Bank of Bikaner & Jaipur
- State Bank of Hyderabad
- State Bank of Patiala
- State Bank of Mysore
- State Bank of Travancore
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Bharatiya Mahila Bank
This merger made SBI the largest public sector bank in India. The idea of having fewer but stronger public sector banks was first proposed by former Finance Minister Arun Jaitley.
Bank of Baroda Merger (April 2019)
In April 2019, Bank of Baroda merged with Vijaya Bank and Dena Bank. After the merger, Bank of Baroda became the third-largest public sector bank in the country.
Large-Scale Mergers in April 2020
Several major mergers took place in April 2020:
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Punjab National Bank (PNB) merged with Oriental Bank of Commerce and United Bank of India, becoming the second-largest PSU bank.
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Canara Bank merged with Syndicate Bank, emerging as the fourth-largest PSU bank.
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Union Bank of India merged with Andhra Bank and Corporation Bank, becoming the fifth-largest PSU bank.
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Indian Bank merged with Allahabad Bank to become the seventh-largest bank in India.
Which Bank Will Be Merged Next?
An important trend to note is that all major bank mergers between 2017 and 2020 were implemented in April, at the beginning of the financial year. Although the Finance Ministry has not officially announced any names yet, there is strong speculation that a major announcement could be made by April 2026.
According to reports, the government is preparing the next phase of bank mergers, and official information may emerge around April–May. Unlike previous rounds, mergers may not happen all at once. Instead, the plan could be implemented in two or three phases to simplify the process and ensure better capital management.
Government’s Long-Term Vision for PSU Banks
As per a report, the government’s long-term goal is to reduce the number of public sector banks from 12 to around 6–7 strong and competitive institutions. This consolidation will strengthen bank balance sheets, increase lending capacity, improve operational efficiency, and help support India’s rapidly growing infrastructure sector by creating banks with large-scale financing capabilities.