Banking & FinanceCurrent Affairs

Cabinet approved amalgamation of PSBs with effect from 1 April

The Union Cabinet led by Prime Minister Narendra Modi approved the consolidation of ten Public Sector Banks (PSBs) into four. The amalgamation of the PSBs will be effective from 1 April 2020.  The banks include: (i) amalgamation of Oriental Bank of Commerce (OBC) and United Bank of India into Punjab National Bank (PNB) (ii) amalgamation of Syndicate Bank into Canara Bank (iii) amalgamation of Andhra Bank and Corporation Bank into Union Bank of India (iv) amalgamation of Allahabad Bank into Indian Bank Highlights: The amalgamation is aimed to create seven large PSBs with scale and national reach, with each amalgamated entity having a business of over Rs.8 lakh crore. The move is expected to help create banks with a scale that can be compared to global banks and capable to compete effectively in India and globally.  It will lead to cost benefits, which should enable the PSBs to enhance their competitiveness and positively impact the Indian banking system. The consolidation will provide impetus to amalgamated entities by increasing their ability to support larger lending and greater financial capacity.  It will also enable the banks to improve their cost efficiency and risk management, and thus, boosting the goal of financial inclusion through wider reach. It will lead to adopting technologies across the amalgamating banks, access to a wider talent pool, and a larger database. 

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