Latest Updates on Bank Merger

The Government of India is preparing a big plan to reorganise public-sector banks. If this plan is adopted, the number of government-owned banks will come down from 12 to only four by the financial year 2027. These four banks will be State Bank of India (SBI), Punjab National Bank (PNB), Bank of Baroda (BoB), and a new, sizable bank created by combining Canara Bank and Union Bank of India, according to sources in a report released by Money Control. The Finance Ministry is working on the idea with the main purpose of strengthening the banks, boosting their financial health and making them strong enough to compete with global lenders.

Canara Bank and Union Bank are scheduled to be combined first. The government is also exploring if Indian Bank and UCO Bank can be incorporated into this same structure. These banks will serve as the primary pillars of the public-sector banking system once they are finished, along with SBI, PNB, and BoB. Other mid-sized banks such as Indian Overseas Bank, Central Bank of India, Bank of India and Bank of Maharashtra may be merged into SBI, PNB or BoB. Punjab & Sind Bank has not yet received a final verdict. Before the plan is implemented, it has to pass through numerous approval phases. It will first be presented to the Minister of Finance.

After that, it will be reviewed by senior officials, examined by the Prime Minister’s Office and checked by SEBI because the decision could affect the stock market. Only after all clearances will the mergers move forward.

The government believes that creating larger and stronger banks will help meet the country’s growing need for credit. Bigger banks can handle large loans, support infrastructure projects and match the growth of private sector banks. Officials also feel that mergers will help cut costs, remove duplicate branches and make better use of capital. They say that this round of consolidation may be smoother than the earlier one because banks today have stronger balance sheets, better systems and more experience in handling mergers.

If this plan becomes a reality, it will be the second major phase of bank consolidation after the 2017–2020 reforms, which reduced the number of state-owned banks from 27 to 12. The new proposal aims to take this change further and build a smaller number of much stronger public-sector banks that can support India’s future growth.

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Meeting for the merger and privatization of PSU banks may be held soon by the prime minister's office

                                       

As per the report, the Privatisation of two public sector banks may be discussed. The meeting is likely to discuss bank consolidation, more operational autonomy for boards of state-run banks, raising FDI limits in PSBs to 49 percent from the current 20 percent, and supporting these banks’ need for additional capital.

The inter-ministerial discussions on the reforms in PSU Banks is in the final stages, and once the PMO meeting is concluded, political decisions will be taken closer to the Budget. The Central government is planning to execute its agenda between 2026 and 2028, before the 2029 general elections.

India is considering increasing the foreign investment limit in public sector banks (PSBs) from the current 20% to 49% in an effort to strengthen these banks and make it easier for them to raise capital. As per the information available till now, while higher foreign stakes may be allowed, the government’s shareholding in PSBs will not fall below 51%, thereby ensuring their public sector status. A final decision will be taken at the highest level of government.

Finance Minister Nirmala Sitharaman on November 6 had also confirmed that the government has begun work on the next phase of public sector bank (PSB) consolidation. She said India now needs several big, world-class banks to support the requirements of a fast-growing economy.

As per sources, the government is considering merging Indian Overseas Bank (IOB), Central Bank of India (CBI), Bank of India (BOI), and Bank of Maharashtra (BoM) with larger banks such as Punjab National Bank (PNB), Bank of Baroda (BoB), and State Bank of India (SBI).

The latest merger proposal also follows NITI Aayog’s recommendation to restructure or privatise smaller PSBs such as IOB and CBI. The government’s think tank had earlier suggested keeping only a few large state-run banks — SBI, PNB, BoB, and Canara Bank — while merging or reducing the government’s stake in the rest. The current plan builds on those earlier recommendations but aligns them with today’s conditions. With fintech and private banks growing rapidly, the idea is to position public sector banks strategically instead of spreading them too thin.

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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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