Latest Updates on Bank Merger and Privatisation

According to sources, the Indian government is creating a new plan to combine a few public sector banks. The government intends to combine Union Bank of India with Bank of India, according to sources. If all goes according to plan, the merger will result in the creation of India's second-biggest bank, after State Bank of India, the nation's largest bank in terms of assets. Mumbai serves as the headquarters for both Union Bank of India and Bank of India. 

 As of June 30, 2025, Bank of Baroda had ₹18.62 trillion in total assets, making it the second largest public sector bank in India. Among all banks, including private banks like ICICI Bank and HDFC Bank, its asset base places it fourth. A merged Union Bank of India and Bank of India would have assets of ₹25.67 trillion.

Additionally, the ministry is considering combining Indian Bank and Indian Overseas Bank. Chennai is home to the headquarters of both banks. In subsequent stages, the privatization of Bank of Maharashtra and Punjab & Sind Bank is being discussed. The merger of other banks under government control may be taken into consideration. 

 Although merger timelines are still pending, the process is expected to begin in FY27. In order to establish fewer but more powerful institutions, the government is developing a massive merger plan that would combine smaller banks with larger ones. The goal is to assist the next stage of credit expansion and financial reforms while fortifying and improving the banking sector.

The government is reportedly thinking of combining Indian Overseas Bank (IOB), Central Bank of India (CBI), Bank of India (BOI), and Bank of Maharashtra (BoM) with bigger banks like Punjab National Bank (PNB), Bank of Baroda (BoB), and State Bank of India (SBI).

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PSB Merger Big News: Government draws up mega bank merger plan; smaller banks will be merged with larger banks by FY27

According to government officials who spoke to Moneycontrol, the government is preparing a massive merger that could combine smaller lenders with larger banks, bringing India's banking industry closer to yet another round of public sector bank consolidation. 

According to a source, the goal is to simplify the PSB landscape so that there are fewer, more powerful organizations that can assist with the upcoming stage of credit growth and financial sector reforms. 

 According to government sources, major banks like Punjab National Bank (PNB), Bank of Baroda (BoB), and State Bank of India (SBI) may combine with Indian Overseas Bank (IOB), Central Bank of India (CBI), Bank of India (BOI), and Bank of Maharashtra (BOM). 

"The PMO will review a record of the plan's discussion after it has been taken up by senior Cabinet officials." The goal is to "finalize the roadmap within the same year," therefore discussions are anticipated to continue in FY27. 

 In order to facilitate consultations and get the opinions of the participating banks, FY27 is probably a good timeframe. According to the source cited above, "the government wants to build consensus internally before making any formal announcements." The finance ministry did not respond to an email asking for remarks.

In order to create stronger, better-capitalized banks that could compete globally, the government merged 10 PSBs into four larger entities between 2017 and 2020, reducing the number of state-owned banks from 27 in 2017. 

Syndicate Bank merged with Canara Bank, and Oriental Bank of Commerce and United Bank of India merged with PNB. This development comes as the Center looks to revive PSB consolidation. The government plans to take up the merger proposals as part of its medium-term banking sector reform strategy.

The ongoing drive for a merger also goes against the suggestions made by NITI Aayog to reform or privatize smaller PSBs, like CBI and IOB, which were considered as possible candidates for a strategic sale. Only a small number of major state-run banks, including SBI, PNB, BoB, and Canara Bank, were to be retained, according to a government think tank. 

The remainder institutions would either be privatized, merged, or have their government ownership reduced. According to someone with knowledge of the talks, "the current plan builds on those recommendations but adapts them to present conditions." "The idea is to strategically position PSBs rather than spread them thin, given the rapid expansion of fintech and the scale expansion of private banks."

What is the record of discussion?

The record of discussion is an internal government document that captures the key points of deliberations. It forms the basis for subsequent decision-making and approvals.

What is the timeline being considered?

According to sources, the proposals are expected to be taken up for inter-ministerial discussions in FY27, which would then be deliberated upon by the cabinet and Prime Minister's Office (PMO) level deliberations in the same fiscal year.

Why is the government considering further consolidation?

The objective is to create larger, stronger banks with better balance sheet capacity, improve operational efficiency, and enhance competitiveness in the global financial landscape.

Source - Moneycontrol

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RBI approves amalgamation of two Gujarat based Co-Operative Banks

The Scheme of Amalgamation of The Dhinoj Nagrik Sahakari Bank Ltd., Dhinoj, Gujarat, with Akhand Anand Co-operative Bank Ltd., Surat, Gujarat, has been approved by the Reserve Bank of India in the exercise of the authority granted by sub-section (4) of Section 44A read with Section 56 of the Banking Regulation Act, 1949.

The plan is scheduled to go into effect on Monday, June 16, 2025. Effective June 16, 2025, all Dhinoj Nagrik Sahakari Bank Ltd. branches in Dhinoj, Gujarat, will operate as branches of Akhand Anand Co-operative Bank Ltd. in Surat, Gujarat.

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Latest Bank Merger News - 2 Banks Amalgamated, RBI issued Notification

The Scheme of Amalgamation of The Adinath Co-operative Bank Ltd., Surat, Gujarat, with Shri Vinayak Sahakari Bank Ltd., Ahmedabad, Gujarat, has been approved by the Reserve Bank of India in the exercise of the authority granted by sub-section (4) of Section 44A read with Section 56 of the Banking Regulation Act, 1949. 

 The plan is scheduled to go into effect on Monday, June 9, 2025. Beginning on June 9, 2025, all of The Adinath Co-operative Bank Ltd.'s branches in Surat, Gujarat, will operate as branches of Shri Vinayak Sahakari Bank Ltd. in Ahmedabad, Gujarat.

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Latest Bank Merger News : 4 PSU Banks likely to be merged

According to sources, the government has formulated its plan for the second round of merger of PSU banks. The government is considering two options for merging four small government banks. To facilitate the merger, changes are being prepared in the Banking Regulation Amendment Act. One option is to merge UCO Bank, Bank of Maharashtra, Punjab & Sind Bank, and Central Bank of India.

The second option involves merging with Union Bank of India, Canara Bank, or Indian Bank according to the banking software. 

The government aims to make these changes in the Banking Regulation Amendment Act to facilitate the merger process. 

The functioning of UCO Bank, Punjab & Sind Bank, Bank of Maharashtra, and Central Bank has shown improvement in the past few years. This is a developing story.

Let us tell you that the government has a 98.25 per cent stake in Punjab & Sind Bank.

While the government has a 93.08 per cent stake in Central Bank, 86.46 per cent in Bank of Maharashtra and a 95.39 per cent in UCO Bank.

The government had announced the merger of 10 public sector banks into four entities in 2019.

This was part of the government's policy to strengthen public sector banks (PSU Bank Mergers) to strengthen their finances for a strong national presence and global reach.

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Latest News : Merger of Public Sector Banks(PSBs)

 

According to a report from CNBC-TV18 on May 17, the Union government of India has stated that there are no plans to merge public sector banks (PSBs). An unnamed government official confirmed that there is no proposal for a merger and that they are not aware of any discussions regarding such a merger.

Currently, India has 12 state-run banks. The number of banks reduced after a merger exercise in 2020, which saw 10 state-run banks being merged into four. These mergers included Punjab National Bank (PNB) absorbing Oriental Bank of Commerce and United Bank, Canara Bank absorbing Syndicate Bank, Union Bank of India absorbing Andhra Bank and Corporation Bank, and Indian Bank merging with Allahabad Bank.

In December 2023, there were speculations of a merger between Union Bank and UCO Bank, as well as Bank of India and Bank of Maharashtra. However, the finance ministry clarified that these speculations were related to a parliamentary committee on subordinate legislation and had no connection to policies on bank mergers.

A document circulating on X (formerly Twitter) detailed a proposed merger between Union Bank and UCO Bank, and Bank of India and Bank of Maharashtra. The document was titled “Study Visit programme of the Committee on Subordinate Legislation, Lok Sabha to Mumbai and Goa from 2 to 6 January 2024” and was attributed to Ramesh Yadav, an undersecretary of the Government of India.

The document was shared with various stakeholders, including the governor of the Reserve Bank of India, chairman of Life Insurance Corporation of India, Insurance Regulatory and Development Authority of India, and National Bank for Agriculture and Rural Development. It was also addressed to the managing directors and CEOs of UCO Bank, Bank of Maharashtra, Bank of India, and Union Bank of India, as well as several  insurance companies.

The finance ministry clarified that the document was solely related to the parliamentary committee on subordinate legislation and had no connection to bank merger policies. The agenda of the meeting was reportedly changed, and the new agenda did not mention any merger plans. In other words, there are currently no proposals for a merger between Union Bank of India and UCO Bank, Bank of India, and Bank of Maharashtra.

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Latest Bank merger news of PSU banks and PSU Insurance Company

 

A government document shared on social media has triggered speculation about possible PSU bank mergers between Union Bank and UCO Bank, and Bank of India and Bank of Maharashtra. The document, whose source couldn't be verified, said that a Parliamentary committee will hold discussions with four PSU banks in the first week of January under banking laws, which govern mergers and acquisitions, among other things.

However, the government has not yet provided official information regarding the merger. Neither of the four PSU banks mentioned have made any stock exchange filings in this regard.

The document being circulated on X (formerly Twitter) is a government PDF issued in the name of Ramesh Yadav, Under Secretary of the Government of India. The letter is issued to the Governor, Reserve Bank of India, Chairman of LIC, IRDAI, and NABARD, along with MD and CEOs of UCO Bank, Bank of Maharashtra, Bank of India, and Union Bank of India.

The PDF is also addressed to CMDs of New India Assurance Company, United India Insurance Company, Oriental Insurance Company, National Insurance Company, and MD & CEO of SBI Life Insurance Company. The subject of the alleged government PDF states 'Study Visit programme of the Committee on Subordinate Legislation, Lok Sabha to Mumbai and Goa from 2 to 6 January 2024'.

The 2-day programme includes informal discussions with the representatives of Union Bank of India and UCO Bank on January 2, and with representatives of Bank of Maharashtra and Bank of India on January 4, 2024, on rules/regulations framed under Banking Regulations Act 1949 and other relevant Acts as applicable to them and the regulatory mechanism in post-merger scenario.

The Finance Ministry has reportedly issued a clarification, saying that this is a parliamentary committee on subordinate legislation, and it has no connection whatsoever with the policies of bank mergers, according to CNBC-Awaaz. Amid the merger buzz, the ministry reportedly changed the agenda of its meeting. According to the new agenda, there is no mention of the word “Merger”, which simply means that there is no proposal for a merger between Union Bank of India and UCO Bank, Bank of India, and Bank of Maharashtra, said CNBC Awaaz in its report.

Meanwhile, No proposal to merge the public sector banks is being considered by the government and the discussions were part of a ‘routine exercise, Reuters also reported citing two sources from the Ministry of Finance.

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Cabinet approves RBI's proposal to merge Lakshmi Vilas Bank with DBS Bank, all branches to function as DBS Bank, says RBI

Union Cabinet on Wednesday approved the merger of capital-starved Lakshmi Vilas Bank (LVB) with DBS Bank India. The Reserve Bank of India on 17 November proposed the merger of the 94-year-old lender with the Indian arm of Singapore’s DBS Bank. As part of the amalgamation, DBIL will infuse fresh capital of Rs.2,500 crore into LVB.

The central bank on 17 November placed Lakshmi Vilas Bank under one-month moratorium, superseded its board and capped withdrawals at Rs.25,000 per depositor. "With the merger, there will no further restrictions on the depositors regarding the withdrawal of their deposit," Union minister Prakash Javadekar said.

Analysts and global credit rating agencies have applauded RBI's move and said that it will benefit both parties. "The quick action taken by the RBI in the Laxmi Vilas Bank matter affirms the faith of the depositors in the banking system," Ajay Shaw, Partner, DSK Legal.

"LVB merger with another bank is a very prudent step in order to save the depositors and to mitigate the systematic disruption associated with it. The image of government and regulator gets enhanced by such timely action and response," said S Ravi, former chairman of Bombay Stock Exchange (BSE) and Managing Partner of Ravi Rajan & Co.

DBS was the first foreign bank to receive a banking licence after the central bank allowed foreign banks to set up a wholly owned subsidiary in 2014. "With DBS likely to use digital capabilities to enhance its physical footprint in India, the proposed deal could lead to a 30-40% increase in Indian assets of DBS," said JPMorgan analysts Harsh Wardhan Modi and Saurabh Kumar.

The regulator had put LVB under Prompt Corrective Action in September 2019. The lender earlier reported widening of its net loss at Rs.397 crore in the second quarter ended September 2020 due to rise in bad loans and provisions. On 25 September, the shareholders of the bank had voted out seven members from the board, including the then MD and CEO S Sundar. The RBI on 27 September appointed the CoD composed of three independent directors Meeta Makhan, Shakti Sinha, and Satish Kumar Kalra, being headed by Meeta Makhan.

Moody’s said the merger will strengthen DBS’s business position in India by adding new retail and small and medium-sized customers.

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