New Delhi: In a major policy decision, the Government on Friday announced amalgamation of 18 Public Sector Banks into four banks in an effort to impart them with a globally competitive edge.
Addressing a press conference here, Union Finance Minister Nirmala Sitharaman said the government is committed to strengtheng banking sector in a bid to achieve five trillion dollar economy by 2022 and announced a slew of measures including amalgamation of Punjab National Bank, Oriental Bank of Commerce and United Bank of India.
The development comes a week after the government announced a number of major policy decisions to revive the economy.
Ms Sitharamam announced the merger of Punjab National Bank (PNB), Oriental Bank of Commerce (OBC) and United Bank of India with a total business of Rs 17.95 lakh crore and a network of 11,437 branches, making it the second-largest public sector bank in the country. Earlier, there were 27 public sector banks in the country.
Ms Sitharaman also announced the consolidation of Canara Bank with Syndicate Bank to form the third-largest PSB with a total business of Rs 15.20 lakh crore.
The merger of Union Bank with Andhra Bank and Corporation Bank will form the fourth-largest PSB with 9,609 branches.
The government also announced the merger of Indian Bank with Allahabad Bank with a business of Rs 8.08 lakh crore, 1.9 times of Indian Bank and covering South, North and Eastern sectors
Meanwhile, the Bank of India and Central Bank of India will continue as central banks with a national presence.
To strengthen the regional presence, Ms Sitharaman announced that Indian Overseas Bank will continue its operations in the South, UCO Bank will keep operation in East and the Punjab and Sindh bank will continue with Rs. 1.71 lakh crore business in the North.
The Indian economy which is currently pegged at $2.65 trillion is facing a downward spiral with the government infusing fresh capital in the banking system. "We are giving these bank enough capital reserve to function without worry. Enough instructions have been given at branch level to make sure credit availability, liquidity will not suffer," Ms Sitharaman said.
Announcing a positive growth in the banking system, the Finance Minister stressed that the gross bad loans of public sector banks have come down to Rs 7.9 lakh crore from Rs 8.65 lakh crore at December-end 2018.
Ms Sitharaman added that partial credit guarantee scheme for NBFCs has been executed since the last announcements and Rs 3,300 cr liquidity support has been given, while Rs 30,000 crore is in pipeline.
Announcing measures to strengthen the banking system, she said, "We need to lay a strong foundation for finance sector by strengthening the banks and giving them a good governance module. In the last several years, we have made sure that several banking reforms are undertaken." She also said the government has its focus on technology driven banking.
The government last week had announced Rs 70,000 cr for PSBs recapitalization of which PNB will get Rs 16,000 cr, Union Bank of India -- Rs 11,700 crore, Bank of Baroda -- Rs 7,000 crore, Canara Bank -- Rs 6,500 crore, Indian Bank -- Rs 2,500 crore.
Indian Overseas Bank will get Rs 3,800 crore, Central Bank of India Rs 3,300 crore, UCO Bank Rs 2,100 crore while United Bank of India -- Rs 1,600 crore and Punjab & Sind Bank Rs 750 crore.(UNI)