With a view to create a world-class banking system in the country, the Union Government is reportedly going to undertake the next phase of PSU bank mergers early next year. The driving force behind the government’s plan for merger is to enable the Indian banks to compete with global players and occupy a place in the top 100 global rankings.
The prime objective behind bank mergers has been to strengthen financial books, trim bad debts, and boost digital and physical infrastructure that collectively result in improving its global competitiveness.
That is precisely the reason why the country’s largest PSU lender, State Bank of India (SBI), is also supporting the next phase of bank consolidation in order to earn more and increase market value.
There are at present six banks in the PSU banking system that still retain their single entities and await merger. They are Bank of India, Indian Overseas Bank, Central Bank of India, Bank of Maharashtra, Punjab and Sind Bank, and UCO Bank.
Experts strongly believe that the bank mergers have proved crucial in ensuring smoother services, greater risk diversification, reduced operational expenditure, and better capital strength, among others.
The banking system has virtually undergone a significant transformation during the last three decades, and under the prevailing scenario, the merger of two or multiple banks to form one uniform and strong bank is the need of the hour.
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