Why bank mergers in India is important for the country's economy? The government took a huge step in making the Indian public sector banks (PSBs) a global lender through bank mergers in India. And this merger becomes successful in its first phase in which the SBI is merged with its 5 associate SBI bank and Bhartiya Mahila Bank. Now, the finance minister Nirmala Sitharaman announced the merger of 10 PSBs into four strong PSB earlier this year which can be helpful in reducing the Non-Processing Asset (NPA) ratio of the banks and increases their lending capacity. Read the given article to know about the latest bank merger list. Which banks are going to merge in the recent PSB merger? After the recent announcement of bank mergers in India the banks which are going to merged is as follows: ❖ Oriental Bank and United Bank of India (UBI) are going to merge with Punjab National Bank (PNB) in the recent merger. With the help of which UBI and oriental bank get support from PNB that help in increasing their lending power and reduce their NPA. After merger banks funds get combined and might provide an Rs.18 lakh crore business. Which makes PNB the 2 largest public sector bank in India. ❖ Another merger which can offer support to the small bank is the Canara bank, it is going to merge with Syndicate Bank and might have become the 4th largest PSB in India. According to the analysts, it can provide an Rs. 15.2 lakh crore business to Canara Bank in future. ❖ The Allahabad Bank and Indian Bank merger would make it the 7 largest PSB in India, and the total business of Allahabad Bank is going to be INR 8.08 lakh crore. ❖ Union Bank Of India is combined with Andhra and Corporation Bank in the recent PSB merger. Which may provide the benefit of INR 14.6 lakh crore business to Union Bank Of India and increases the lending capacity of the Corporation and Andhra Bank. What is the advantage of bank mergers in India? Merger is important for the public sector banks in India because this could help in supporting the weaker banks. As from the above-mentioned bank merger list you can estimate that it can provide a massive increase in their business. Because the larger banks are capable of facing global competition and this could be helpful in reducing the cost of banking operations. Merger could also provide better NPA and Risk management for the PSBs and improve its efficiency.
Bank mergers in India are also beneficial for the Indian economy as after the merger there are higher chances of survival for the underperforming banks in India. With the merger, you will get the benefit of wide banking services as the banks get combined so do their branches and ATMs it happened in the case of Bank Of Baroda merger with Vijaya and Dena Bank. The lending capacity of the banks also rises after the merger as their fund gets combined and the user can borrow a higher loan amount from the bank.