Merger of banks

Merger of Banks in India – Good or

Bad?
Recently, the Union Ministry of Finance decided to merge three public sector banks namely
Bank of Baroda, Dena Bank and Vijaya Bank. However, the decision to merge at the time of
weakening trend of banks has raised serious concerns.

Background

 The idea of bank consolidation was around since 1991, when

former RBI governor M. Narasimham had suggested the government
to merge banks into a 3-tiered structure, with 3 large banks with a
global presence at the top, 8 to 10 national banks at tier 2 and a large
number of regional and local banks at the bottom.

 In 2014, PJ Nayak Panel had also recommended that the

government should either merge or privatize Public Sector Banks
(PSBs).

Why Banks Merger/Consolidation?

 Public Sector Banks (PSBs) in India is highly fragmented

compared to other key economies.

 The merger will facilitate the government to pay closer attention

to the enlarged institution.
 It will protect the financial system and depositors’ money since
the enlarged institution will be more profitable and better deal with
any stressed loans.

 To develop the capacity to satisfy the demand for credit (loan)

and sustain economic growth.

 In 1991 itself, Narasimham Committee recommended that India

should have fewer but stronger PSBs.

What is the procedure for Banks Merger?

 Bank consolidation procedures are provided under the Banking

Regulation Act, 1949.

 Any two PSBs can initiate merger discussions, however, the

merger scheme should be finalized by the government in consultation
with RBI and it must be placed in Parliament for approval.

 Parliament has the right to modify or reject the merger scheme.

 Parliamentary approval is also necessary for the merger between

a public sector bank and a private bank.

What is the significance of PSBs mergers? (pros)

 It will reduce their dependence on the government for capital

since it will increase the role of internal and market resources.

 It will open up more capital generation opportunities, both

internally and from the market, for the merged entity.
 For the government, it will enable more dividends which forms
part of their non-tax revenue.

 It will lead to greater concentration of payment and settlement

flows since there will be lesser competitors in the financial sector.

 Operational risks would decrease after the merger because when

the size of the operations grows, the distance between management
and operational personnel is greater, thus creating a geographical gap
leading to a less efficient system. The merger of banks could avoid it.

 It will help to better deal with their credit portfolio including

stress or Non-performing assets (NPAs). Because consolidation will
prevent more resources being spent in the same area and strengthen
banks to deal with shocks.

What are the concerns regarding the merger? (cons)

 Weaker banks would make an unhealthy impact on the

operations of the stronger one after the merger.

 For instance, after the announcement of the merger, shares

of Bank of Baroda and Vijaya Bank fell substantially. However,
Dena bank gained sharply.

 Notably, Dena bank is the bank in the worst financial

situation among the 3 entities. It is currently under RBI Prompt
Corrective Action Framework (PCA). Note – Learn about PCA at
the bottom.
 The strategy to ask healthy banks to take over weak banks is less
likely to solve the bad loan crisis in the banking system.

 Minority shareholders will be affected by the decision of

dominant shareholder i.e., the government, as the former left with no
say in the matter.

 Human resource and cultural issues can also impede the success
of mergers.

 It will impede the government’s goal of financial inclusion to

reach the unbanked poor. It has to be noted that, during the post-
liberalisation period after 1991, the merger of state banks with its
associates resulted in the closure of about 5,000 branches in rural and
remote areas.

What are the challenges with the merger?

Management: With the merger, the management will bear critical

challenges with respect to staff integration, rationalisation of
branches, synchronizing accounting, cultural compatibility, policies
for recognition of bad loans etc.

Employees: The whole process face resistance from employee unions,

who are fearful of losing their jobs. Their promotion prospects may be
affected due to a reduction of seniority in the merged entity. Further,
the rationalisation of branches will lead to their relocation.
Pensions: Pension would be affected due to different employee
benefit structures.

Process: A merger in the private sector will include changing the

shareholders. But this is difficult with PSBs since the government is
the dominant shareholder.

What should be the government’s move?

On Financial inclusion: Government should not look at the merger

as the only way for financial inclusion.

 Financial inclusion can be better served with other means like

Jan Dhan Yojana and

 Establishment of India Post Payments Bank that took banking

services to the doorsteps of the unbanked poor.

 The government should give some time for these programmes to

yield meaningful results.

On NPA: Government should not see the banks consolidation as the

only means to solve the NPA crisis.

 There are legal and regulatory measures to address the NPA

issues through a market-based resolution plan in the form of
insolvency and bankruptcy (IBC) code.

 Efforts were also taken to put 11 banks under surveillance via

prompt corrective action (PCA) plan to de-stress the banking sector.
Infrastructure banks: Government can establish infrastructure
development banks to fund infrastructure projects and relieve PSBs of
this task. Infrastructure is one of the key components of stressed loans
due to its long-term nature.

Governance: Government should focus on improving governance in

PSBs through Bank Board Bureau and not interfere in the loan
sanctions.

Way ahead

Undeniably, there are too many public sector banks in India and
hence consolidation is a good idea in theory. However, mergers
should be done between strong banks. It is crucial to ensure that such
mergers do not end up creating an entity that is weaker than the
original pre-merger strong bank. Certainly, mergers are just one way
of managing the crisis and thus cannot be ignored totally. But the trick
lies in ensuring that the merger process is managed prudently.
Identifying synergies and exploiting scale efficiencies will be
important here.

About Prompt Corrective Action (PCA) framework

 It is meant to take necessary corrective action on weak and

troubled banks.

 Under this, RBI has created some trigger points to assess,

monitor and control banks.
 The trigger points are based on CRAR (a metric to measure
balance sheet strength), NPA and ROA (Return on Assets).

 Based on each trigger point, the banks have to follow a

mandatory action plan.

 Once the bank triggered the point, it will be barred from

undertaking fresh business activities like opening branches, recruiting
personnel or lending to risky firms.

 Apart from these actions, RBI could also take discretionary

action plans.

Second article
Banks Merger in India: Is it good
for Indian Economy?
Updated on April 02, 2020

The largest ever merger in the public sector banking space in India
has taken place on Wednesday April 1, 2020 when six Public Sector
Banks were merged into four large banks in a bid to make them
globally competitive. Customers, including depositors of the merging
banks, will now be treated as customers of the banks in which they
have merged.

Following the consolidation, there are now seven large public sector
banks (PSBs), and five smaller ones. There were as many as 27 PSBs
in 2017. The total number of public sector banks in the country have
come down from 18 to 12 from April 1, 2020.

Merger and Acquisition of Banks in India and its effects has become a
favourite topic of Group Discussion in FMS Delhi, IIMs, MDI, XLRI
among others. Apart from other B-schools, FMS Delhi also placed
this topic in the final selection round in 2018. Below is shared the
solved write up on the topic.

The Banks’ merger dated April 1, 2020 has resulted in the creation of
seven large PSBs with scale and national reach, with each
amalgamated entity having business of over Rs 8 lakh crore and it has
helped to create banks with scale comparable to global banks and
capable of competing effectively in India and globally.

As per the mega consolidation plan, Oriental Bank of Commerce and

United Bank of India have merged into Punjab National Bank (PNB);
Syndicate Bank into Canara Bank; Andhra Bank and Corporation
Bank into Union Bank of India; and Allahabad Bank into Indian
Bank.

The exercise assumes significance as it has taken place at a time when

the entire country is under the grip of COVID-19 outbreak. It has
triggered 21-day lockdown to contain the spread of the deadly virus.
Experts are of the opinion that merger at this point of time may not be
remain a very smooth and seamless transition. However, heads of the
anchor banks have exuded confidence and do not find any problem as
the process has gone as per the plan with certain modification in
implementation.

The four anchor banks -- PNB, Canara Bank, Union Bank and Indian
Bank -- have postponed some part of the implementation and
processes due to the lockdown for example like loan process which
were proposed to be followed earlier.

In addition, consolidation would also provide impetus to merged

entities by increasing their ability to support larger ticket-size lending
and have competitive operations by virtue of greater financial
capacity.

Last year, Dena Bank and Vijaya Bank were merged with Bank of
Baroda. Prior to this, the government had merged five associate banks
of SBI and Bharatiya Mahila Bank with the public sector bank. These
were State Bank of Patiala, State Bank of Bikaner and Jaipur, State
Bank of Mysore, State Bank of Travancore and State Bank of
Hyderabad effective April 2017.

Punjab National Bank becomes 2nd Largest Bank: Oriental Bank of

Commerce and United Bank merger into Punjab National Bank has
created a bank with ₹17.95 lakh crore business and 11,437 branches.

4th Largest Bank – Merger of Canara Bank & Syndicate Bank: The
merger of Syndicate Bank with Canara Bank has created the fourth
largest public sector bank with ₹15.20 lakh crore business and a
branch network of 10,324.

5th Largest Bank: Merger of Andhra Bank and Corporation Bank

with Union Bank of India has created India's fifth largest public sector
bank with ₹14.59 lakh crore business and 9,609 branches.

7th Largest Bank: The merger of Allahabad Bank with Indian Bank
has created the seventh largest public sector bank with ₹8.08 lakh
crore business having strong branch networks in the south, north and
east of the country

India has 12 Banks Now

The biggest overhaul in public sector banks has left India with only
12 banks now instead of 18 before the Merger. According to the
Government this decision of making large entities will make the
Indian banks capable of meeting the higher funding needs of the
economy and will help in acquiring the global scale.
Banking order (Largest to Business in Lakhs of crore
Market Sha
Smallest) Rupees
State Bank of India 52.1 22.5
PNB+OBC+United Bank 17.9 7.7
HDFC Bank 17.5 7.6
Bank of Baroda 16.1 7
Canara + Syndicate Bank 15.2 6.6
Union+Andhta+Corporation Bank 14.6 6.3
ICICI Bank 12.7 5.5
Axis Bank 10.6 4.6
Bank of India 9.0 3.9
Indian + Allahabad Bank 8.1 3.5
Source: ToI dt Aug 31, 2019

Fruitful Result of Banks’ Merger

As per studies conducted, most of the mergers done in the past, have
proved to be an overall success for the weaker banks although there
are no concrete parameters to verify this observation. Hence going by
the track record merger and acquisition in Indian banking have been
fruitful for the Indian Economy.

Banks’ Merger: Background

Announcing the mega plan of Banks’ merger on Friday August 30,
2019 with an aim to have financially strong Public sector banks in
India, the Finance Minister of India Nirmala Sitharaman had outlined
the Government’s plan to merge 10 public sector banks into four large
banks. After the mergers, there will be 12 public sector banks in India,
including State Bank of India and Bank of Baroda. The merger is
expected to create fewer and stronger global-sized Banks to boost
economic growth.

On March 4, 2020, the Finance Minister announced the final date of

merger as April 1, 2020. According to her, the exercise of
consolidation of 10 public sector banks (PSB) into four is on course
and the merger will come into effect from April 1, 2020. The Union
Cabinet has given a go-ahead for the merger

It is but the desire for growth that acts as the fuel not only for an
entrepreneur but also for every professional or corporation. This deep
desire for growth in terms of customer base, balance sheet and profit
has led the organizations engaging in mergers and acquisitions to
move ahead and onwards in synergy.

The Indian Banks too did not stay aloof from this wave of mergers
and acquisitions (M&A). Initially banks were merged to save non-
performing banks or non efficient banks but as time evolved the
system too evolved. In the recent times mergers and acquisitions have
also been made on grounds of business growth, profitability and
organizational restructure.

History of Mergers in Indian Banking

Mergers of banks began in India in the 1960s in order to bail out the
weaker banks and protect the customer interests. After that in post
liberalization period the quest to create an Indian bank that would be
in the league of global giants had been continuing since 1990. Moving
on the path of creating one of the largest global banks, the
government had approved the merger of five associate banks with SBI
in February 2017. Later in March, the Cabinet approved merger of
BMB also.

Merger & Nationalization during the period from 1961-1969: The

period is called pre-nationalization period because in 1969 the
government nationalized 14 private banks. As many as 46 mergers
took place mostly of private sector banks in order to revive the poorly
performing banks which proved to be quite a successful move for the
underperforming banks.

The period from 1969-1991: The period was called post-

nationalization period. It saw six private banks being nationalized in
1980. In this period 13 mergers took place mostly between public and
private sector banks.
The post liberalization period, which stretches from 1991-2015, saw
major economic reforms initiated by Government of India. Many new
policies were framed. Greater FDI and foreign investment was
allowed which saw resurgence in Indian Banking. As many as 22
mergers took place - some to save weaker banks and some for the
sake of synergic business growth.

Bank Mergers (1993-2004): The merger of Oriental Bank of

Commerce with Global Trust bank in 2004 saved the latter after its
net worth had wiped off and also handed OBC a million depositors
and a decent market in South India. Mergers of Punjab National Bank
(PNB) with the then eroded New Bank of India (NBI) in 1993-94 and
that of Benaras State bank Ltd with Bank of Baroda in 2002 also
proved to be life saving for the weaker bank.

Bank Mergers & Consolidation 2008-2010: SBI first merged State

Bank of Saurashtra with itself in 2008. Two years later in 2010, State
Bank of Indore was merged with it. The board of SBI earlier approved
the merger plan under which SBBJ shareholders got 28 shares of SBI
(Re.1 each) for every 10 shares (Rs10 each) held. Similarly, SBM and
SBT shareholders got 22 shares of SBI for every 10 shares.

Post the merger, the SBI was in the process to rationalize its branch
network by relocating some of the branches to maximize reach. This,
according to SBI helped the bank optimize its operations and improve
profitability. SBI had approved separate schemes of acquisition for
State Bank of Patiala and State Bank of Hyderabad. There was no
proposal for any share swap or cash outgo as they were wholly-owned
by the SBI.

Consolidation of Banks (2015-2017) – This phase saw five

associates of SBI and Bhartiya Mahila Bank getting merged in SBI.
The vision was to have strong banks rather than having large number
of banks. This resulted in SBI being one amongst the 50 largest banks
in the world.
Union Cabinet decided to merge all the remaining five associate
banks of State Bank Group with State Bank of India in 2017. After
the Parliament passed the merger Bill, the subsidiary banks ceased to
exist and the State Bank of India (Subsidiary Banks) Act, 1959 and
the State Bank of Hyderabad Act, 1956 were repealed.

Five associates and the Bharatiya Mahila Bank became the part of
State Bank of India (SBI) beginning April 1, 2017. This has placed
State Bank of India among the top 50 banks in the world. The five
associate banks that were merged into State Bank of India were- State
Bank of Bikaner and Jaipur (SBBJ), State Bank of Hyderabad (SBH),
State Bank of Mysore (SBM), State Bank of Patiala (SBP) and State
Bank of Travancore (SBT). The other two Associate Banks namely
State Bank of Indore and State Bank of Saurashtra had already been
merged with State Bank of India. After the merger, the total customer
base of SBI increased to 37 crore with a branch network of around
24,000 and around 60,000 ATMs across the country.

Merger of Banks 2018- The government had merged Dena Bank and
Vijaya Bank with Bank of Baroda, creating the third-largest bank by
loans in the country in 2018.

Mega Merger of Banks 2019- With the mega merger announce on

August 30, 2019, ten public sectors banks are now reduced into four
large banks. The four sets of banks that have been created out of
Canara Bank and Syndicate Bank merger; Indian Bank and Allahabad
Bank merger; Union Bank of India, Andhra Bank and Corporation
Bank merger; and the bank to be created after merger of Punjab
National Bank, Oriental Bank of Commerce and United Bank of
India.
Six Banks Untouched: The mega merger has left untouched six other
banks out of which two are national banks and the four have regional
focus. The untouched banks are Bank of India, Central Bank of India,
Indian Overseas Bank, Uco Bank, Bank of Maharashtra and Punjab &
Sind Bank which will continue as separate entities as before.

Rs. 55000 Crore Recapitalization Plan With Mega Merger

The Finance Minister of India has also announced Rs.55,000 Crore
recapitalization plan for the banks formed after merger. Besides,
recapitalization will also be infused to the six other banks which are
not the part of this merger.
Amount of Recapitalization a
Banking Recapitalization (Highest to Lowest)
Crores)
Punjab National Bank 16,000
Union Bank of India 11,700
Bank of Baroda 7,000
Canara Bank 6,500
Indian Overseas Bank 3,800
Central Bank of India 3,300
UCO Bank 2,100
United Bank of India 1,600
Punjab & Sind Bank 750
Source: ToI dt Aug 31, 2019

Advantages of Bank Mergers

 Larger Bank is capable of facing global competition
 The merger will reduce the cost of banking operation
 Merger will result in better NPA and Risk management
 Merger will help in improving the professional standards
 Decisions on High Lending requirements can be taken promptly
 For the bank, retaining and enhancing its identity as a larger
bank becomes easier. After the merger, benefits of merger are
enormous and the biggest is generation of a brand new customer base,
empowering of business, increased hold in the market share,
opportunity of technology upgrade. Thus overall it proves to be
beneficial to the overall Economy
 Provides better efficiency ratio for business operations as well
as banking operations which is beneficial for the economy
 Minimization of overall risk is there due to mergers and
acquisitions which is always good from the business point of view
 Leads to increase in profitability and helps in raising the
standard of living which is absolutely crucial for a growing economy
like India
 Chances of survival of underperforming banks increases hence
customer trust remains intact which is vital for the Economy. The
weaker bank gets merged into stronger one and gets the benefit of
large scale operations
 The objectives of financial inclusion and broadening the
geographical reach of banking can be achieved better with the merger
of large public sector banks and leveraging on their expertise.
 With the large scale expertise available in every sphere of
banking operation, the scale of inefficiency which is more in case of
small banks, will be minimized
 The merger will help the geographically concentrated regionally
present banks to expand their coverage
 Larger size of the Bank will help the merged banks to offer
more products and services and help in integrated growth of the
Banking sector
 A larger bank can manage its short and long term liquidity
better. There will not be any need for overnight borrowings in call
money market and from RBI under Liquidity Adjustment Facility
(LAF) and Marginal Standing Facility (MSF)
 In the global market, the Indian banks will gain greater
recognition and higher rating
 With a larger capital base and higher liquidity, the burden on the
central government to recapitalize the public sector banks again and
again will come down substantially
 Multiple posts of CMD, ED, GM and Zonal Managers will be
abolished, resulting in substantial financial savings
 Bank staff will be under single umbrella in regard to their
service conditions and wages instead of facing disparities.
Problems Arising due to Mergers & Acquisitions in Indian
Banking
Most of the problems arising due to mergers and acquisitions are
more emotional and social in nature than technical or managerial. The
major problems which arise are:-
 Compliance needed in every decision which might not be
favorable as thinking perspectives and risk taking abilities of different
organizations are different. It leads to friction and rift which, if not
managed well may lead to the downfall of the organization as a
whole.
 Banks are merged only on papers. Their people and culture are
difficult to change. It is a recipe for disaster as it leads to poor culture
fit not ideal for the organization or the economy.
 Risk of failure increases if the executives are not committed
enough in bringing the merger platforms together for the merging and
taking over bank. Such failure may prove brutal for the Economy.
 Impact of customers on banking merger or acquisition is often
quite emotional. If customer perception is not managed with frequent
and careful communication it may lead to loss of business which is
never good for the Economy.
 Managing Director of Federal Bank, V.A. Joseph is of the view
that Co-existence of the big, medium and regional banks would be
preferable in the present scenario. According to him most acquisitions
in India were borne out of compulsions and over 90 per cent of past
acquisitions had failed to achieve the objectives.
 Many banks focus on regional banking requirements. With the
merger the very purpose of establishing the bank to cater to regional
needs is lost.
 Large bank size may create more problems also. Large global
banks had collapsed during the global financial crisis while smaller
ones had survived the crisis due to their strengths and focus on micro
aspects.
 With the merger, the weaknesses of the small banks are also
transferred to the bigger bank.
 So far small scale losses and recapitalization could revive the
capital base of small banks. Now if the giant shaped bank books huge
loss or incurs high NPAs as it had been incurring, it will be difficult
for the entire banking system to sustain.
Important But to Remain under Watch
Mergers are important for the consolidation and expansion purposes
that is why in today’s scenario many private sector banks are
genuinely interested in mergers and acquisition. They are also crucial
for Economy as they are most of the times successful in saving weak
banks which fail in meeting expectations.

Merger creates variety of problems which can cause great damage if

the process of merging is not executed properly.

If merging is needed it must be executed in a manner which leads to

an environment of trust and agreement among the people of both the
organizations. If people, work culture and vision are blended together
nicely, merging will definitely have synergic effects and create a win-
win situation.
---------------------------------------------------------------------------
Mega Bank Merger: Key Figures,
Motive, Impact, Significance & all
you need to know - Explained
Merger of Big Banks: 10 mega banks merged into 4 PSBs. India will
now have 12 Public Sector Banks from 27 Public Sector Banks in
2017. Know the key facts & figures, the objective behind the merger,
its impact and significance here.
RUPALI PRUTHI
AUG 30, 2019 18:46 IST

Mega Bank Merger: Union Finance Minister Nirmala Sitharaman

announces the merger of ten big public sector banks (PSBs) into
four. The banks which are being merged are Punjab National
Bank, Oriental Bank of Commerce, United Bank of India, Indian
Bank, Allahabad Bank, Canara Bank, Syndicate Bank, Union Bank
of India, Andhra Bank and Corporation Bank. India will now have
12 Public Sector Banks from 27 in 2017. The merger of banks
was announced under the Bank Consolidation plan among other
major initiatives and steps to accelerate the economic growth of
India.
While addressing a press conference, FM Sitharaman mentioned
that only six banks showcased profitability in the 4th Quarter of
2018-19. However, in Quarter 1 of 2019, 14 PSBs showcased
growth and profit. In order to boost the national presence of
banks along with their global reach, the amalgamation of banks
was necessitated. This is not the first time that the Government is
merging the banks together. Earlier, under the Banks
Consolidation plan itself, the Government had merged all the
entities of State Bank of India into one and merged Bank of
Baroda, Dena Bank and Vijaya Bank as one single entity. The
merger of these banks is aimed at making India a USD 5 trillion
economy.
Banks to be merged together are:
- Punjab National Bank, Oriental Bank of Commerce, United Bank
of India will be merged as one

- Canara Bank & Syndicate Bank

- Union Bank of India, Andhra Bank and Corporation Bank

- Indian Bank & Allahabad Bank

The Government targets USD 5 trillion economy through these

bank reforms and consolidation. The Government would infuse Rs
55,250 Crore of capital in these 10 big banks for their credit
growth and regulatory compliance to boost the economy. Apart
from these merged banks, two public sector banks will continue
to work as an independent body to strengthen national presence.
These banks are Bank of India and Central Bank of India. Four
regional banks will also continue to work independently to
strengthen the regional focus. These are: Indian Overseas Bank,
UCO Bank, Bank of Maharashtra and Punjab & Sind Bank

Details of Amalgamation of 10 Banks into 4 NextGen PSBs

Head/Anchor Business Size
Merged banks PSB Size
Bank (Rupees)
Punjab National
Bank
Punjab
Oriental Bank of 17.94 Lakh crore 2nd largest Bank
National Bank
Commerce
United Bank of India
Canara Bank
Canara Bank 15.20 Lakh crore 4th largest Bank
Syndicate Bank
Union Bank of India
Union Bank of
Andhra Bank 14.59 Lakh crore 5th largest Bank
India
Corporation Bank
 Indian Bank
Indian Bank 8.08 Lakh crore 7th largest Bank
Allahabad Bank
State Bank of India (Merged earlier)52.65 Lakh crore 1st largest bank
Bank of Baroda (Merged earlier) 16.13 Lakh crore 3rd largest bank
Banks that will continue to work individually: Apart from
these 10 merged entities, six banks will continue to work
individually. Have a look at the details of these banks:

Bank Business Size

9.03 Lakh crore (6th Largest
Bank of India
Bank)
Central Bank of India 4.68 Lakh crore
Indian Overseas Bank 3.75 Lakh crore
UCO Bank 3.17 Lakh crore
Bank of Maharashtra 2.34 Lakh crore
Punjab & Sind Bank 1.71 Lakh crore
Capital Infusion in the Public Sector Banks
Finance Minister Sitharaman also announced capital infusion in
the public sector banks with an aim to scale them. The
Government plans to infuse Rs 55,250 Crore of capital in the
PSBs. Have a look at bank-wise capital infusion:

Bank Capital Infusion

Punjab National Bank Rs 16,000 crore
Union Bank of India Rs 11,700 crore
Bank of Baroda Rs 7,000 crore
Indian Bank Rs 2,500 crore
Indian Overseas Bank Rs 3,800 crore
Central Bank of India Rs 3,300 crore
UCO Bank Rs 2,100 crore
United Bank of India Rs 1,600 crore
Punjab and Sind Bank Rs 750 crore
Figures of Amalgamated Banks
Motive & Objective behind Merger of PSBs
The Finance Ministry opines that the merger of these 10 public
sector banks (PSBs) will help India make a USD 5 Trillion
Economy. The bank merger was done under the bank
consolidation plan of the Union Government. Have a look at the
government’s objective behind the merger of these banks:

- Enhanced capacity to increase credit

- Banks with a strong national presence and international reach

- Reduction in lending cost

- Next Generation technology for the banking sector

- Improved ability to raise market resources