Page 27 - Banking Finance January 2022

ARTICLE

AMALGAMATION

OF PUBLIC

SECTOR BANKS IN

INDIA: BOON OR

BANE?

Introduction The exercise assumes significance as it took place at a time
when the entire country was under the grip of COVID-19
Ten Public Sector Undertaking (PSU) banks amalgamated into
outbreak. It triggered 21-day lockdown to contain the
four banks with effect from 1st April 2020. In the biggest
spread of the deadly virus. Experts said merger at this point
consolidation exercise in the banking space, the number of
of time will not be very smooth and seamless. However,
public sector banks in India has come down to 12 from 18.
heads of the anchor banks were exuding confidence. The
There were as many as 27 Public Sector banks in 2017. In the four anchor banks - PNB, Canara Bank, Union Bank and
past, various other bank mergers have taken place.
Indian Bank - postponed some part of the implementation
and processes due to the lockdown. After this consolidation,
For instance, in 2017, the country's largest public lender -
there are seven large public sector banks (PSBs), and five
the State Bank of India took over five of its associates and smaller ones.
Bharatiya Mahila Bank. These were State Bank of Patiala,
State Bank of Bikaner and Jaipur, State Bank of Mysore, History of Mergers in Indian Banking
State Bank of Travancore and State Bank of Hyderabad
Mergers of banks began in India in the 1960s in order to
effective April 2017. Last year, Vijaya Bank and Dena Bank
bail out the weaker banks and protect the customer
were amalgamated with Bank of Baroda.
interests. In 1969 the government nationalized 14 private
banks. As many as 46 mergers took place mostly of private
About the author sector banks in order to revive the poorly performing banks

which proved to be quite a successful move for the
Amit Roy underperforming banks.
Senior Manager & Faculty
Union Bank of India The period from 1969-1991: The period was called post-
Staff Training Centre, Kolkata
nationalization period. It saw six private banks being

BANKING FINANCE | JANUARY | 2022 | 27