Agencies

Govt announces mega merger of PSBs, bringing down their number to 12 In the biggest consolidation exercise in the banking space, the government on Friday announced four major mergers of public sector banks, bringing down their total number to 12 from 27 in 2017, a move aimed at making state-owned lenders global sized banks.United Bank of India and Oriental Bank of Commerce will be merged with Punjab National Bank, making the proposed entity the second largest public sector bank (PSB).Making the announcements, Finance Minister Nirmala Sitharaman said Syndicate Bank will be merged with Canara Bank, while Allahabad Bank will be amalgamated with Indian Bank.Similarly, Andhra Bank and Corporation Bank will be consolidated with Union Bank of India.In place of fragmented lending capacity with 27 PSBs in 2017, now there will be only 12 state-run banks post consolidation, Sitharaman said.

In another round of boosters for the economy, Finance Minister Niramala Sitharaman today announced amalgamation of 10 public sector banks into four big banks. After this the total number of Public Sector Banks in the country will come down to 12 from 27 banks in 2017. Apart from this the government announced Rs 55,250 crore upfront capital infusion in the PSBs.This comes a week after Finance Minister announced a series of measures to boost the economy. In big banks merger, Sitharaman announced that government has decided to merge Punjab National Bank, Oriental Bank of Commerce and United Bank; Canara Bank and Syndicate Banks; Union Bank of India, Andhra Bank and Corporation Bank; and Indian Bank and Allahabad Bank.Here are all the key announcements:* PNB, OBC and United Bank to be merged. The new merged bank will be the second largest PSB in the country with Rs 18 lakh crore business and second largest branch network in India.* Canara and Syndicate Bank will also be merged to become the fourth largest PSB with Rs 15.2 lakh crore business and third largest branch network in India.* Merger of Union Bank of India, Andhra Bank and Corporation Bank will create India's fifth largest PSB with Rs 14.6 lakh crore business and fourth largest branch network.* Indian Bank and Allahabad Bank merged. The new bank will be seventh largest with Rs 8.08 lakh crore business.* Government also announced Rs 55,250 crore upfront capital for credit growth & regulatory compliance to support economy. PNB will get Rs 16,000 crore; Union Bank Rs 11,700 crore; Canara Bank Rs 6,500 crore; Indian Overseas Bank Rs 3,800 crore; Central Bank of India Rs 3,300 crore; Bank of Baroda Rs 7,000 crore; Indian Bank Rs 2,500 crore and Uco Bank Rs 2,100 crore.* Big banks with enhanced capacity to increase credit and bigger risk appetite, with national presence and global reach.* Sitharaman said the government is trying to create big next generation banks.* No retrenchment has taken place post merger of Bank of Baroda, Dena Bank and Vijaya Bank; staff has been redeployed and best practices in each bank have been replicated in others.* Non-official directors to perform role analogous to independent directors*Government's intention not just to give capital but also give good governance.* There is no government interference in commercial decisions of banks, says Sitharaman.* Gross NPA level has come down heavily.* Govt monitoring large loans to avert frauds.* Sanctioning and monitoring of loans are separated.* Special agencies formed to monitor loans above Rs 250 crore to avoid a Nirav Modi like situation.* Eight public sector banks have launched repo-rate linked loans in the last one week.* Four NBFC have already found liquidity solution through a settlement with banks.* Govt taking steps to make a clear path to achieve a target of $5 trillion economy.* Last week, the Finance Minister had announced a slew of measures to revive economic growth from a five-year low. She had announced rollback of super-rich tax on foreign and domestic equity investors, exemption of startups from 'angel tax', a package to address distress in the auto sector and upfront infusion of Rs 70,000 crore into public sector banks, in an effort to boost growth.