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Kolkata: The merger of some PSU banks, especially a few smaller ones with healthier ones,, has been in the air for some time. Now preparations for the next wave of mergers -- the first one took place in 2019-20 -- seems to have begun in right earnest. The government is convinced that as India gets into high gear of quick economic growth and building major infrastructure projects, the country needs large and strong banks in the coming years.
The coming year could witness announcements of merger of PSU banks by the government which is a part of the blueprint that is supposed to catalyse the transition of India into a developed country by the 100th year of Independence, reports state. Right now the country has a dozen PSU banks but none of them, barring State Bank of India, makes it to the top 50 banks worldwide. Moreover, there are no Indian banks, PSU or private, in the top 100 banks of the world. The Centre is of the opinion that larger banks will strengthen capital, bolster India's muscle on the global platform and raise risk-taking capacity.
In 2019-20 a round of big-bang mergers took place
Number of PSU banks came down from 27 to 12
United Bank and Oriental Bank of Commerce were merged with Punjab National Bank
Syndicate Bank was merged with Canara Bank
Allahabad Bank was merged with Indian Bank
Andhra Bank and Corporation Bank were merged with Union Bank
Dena and Vijaya Bank were merged with Bank of Baroda
The Indian banking sector is in the pink of health with improving asset quality and net interest margins. In the first half of FY26, 12 PSU banks earned a cumulative profit of about Rs 93,675 crore. This figure could exceed Rs 2 lakh crore for FY26. The improving performance and bottomline are helping the government to take major decisions.
Foreign investors are evincing interest to invest in the banking and financial sector of India. Major Japanese institutions are announcing deals to invest in Yes Bank, RBL Bank and the insurance sector. Japan's Mitsubishi UFJ Financial Group is investing close to Rs 40,000 crore in Shriram Finance for a 20% stake.
