Finance Minister Nirmala Sitharaman to meet heads of merging banks

New Delhi: Finance Minister Nirmala Sitharaman will hold meeting with chief executives of amalgamating banks on Thursday to review preparedness for the merger beginning April 1.

Earlier this month, the Union Cabinet headed by Prime Minister Narendra Modi approved consolidation of 10 state-owned banks into four.

According to sources, the Finance Minister will review planning and preparedness of merging banks on March 12. Agenda of the high-profile meeting includes readiness of anchor banks to minimise disruption to customers and ensuring credit flow to productive sectors of the economy, sources said. The meeting will also review preparedness of delivery of banking services and products to customers after the mergers.

It will also discuss business and financial plans, including credit and deposits growth, and year-wise synergy realisation after the mergers. The mergers are scheduled to come into effect from April 1.

As per the proposal, Oriental Bank of Commerce (OBC) and United Bank of India (UBI) would be merged into Punjab National Bank (PNB). The move will make PNB India's second-biggest public sector bank after State Bank of India (SBI). Syndicate Bank will be merged with Canara Bank, creating India's fourth-largest public sector bank. Union Bank of India, Andhra Bank and Corporation Bank will be merged together to create fifth-largest public sector bank. Indian Bank and Allahabad Bank will be merged to form India's seventh-largest public sector bank.

The mega consolidation would help create banks with scale comparable to global banks and capable of competing effectively in India and globally. Last year, Dena Bank and Vijaya Bank were merged with Bank of Baroda. Prior to this, the government had merged five associate banks of SBI and Bharatiya Mahila Bank with SBI.