Government's focus on Indian PSU bank mergers has once again returned so as to create fewer but larger and stronger banking entities. Under the plan, smaller or mid-sized PSU banks may be merged into larger, stronger ones like State Bank of India (SBI), Punjab National Bank (PNB) or Bank of Baroda (BoB).
Possible Mergers on the Radar
There are six PSU banks that are currently as single entities may be decided in the next consolidation wave:
- Indian Overseas Bank (IOB)
- Central Bank of India (CBI)
- Bank of India (BOI)
- Bank of Maharashtra (BOM)
- UCO Bank
- Punjab & Sind Bank
The government has not made any official announcement yet. But these are the proposals that currently being discussed and the consolidation plan could begin as soon as fiscal year 2026-27 (FY27).
The proposals will first be reviewed by senior officials, then by the Cabinet and the Prime Minister's Office.
PSB Mergers So Far
Several significant PSB mergers have taken place, especially from the year 2017 to 2020, resulting in stronger banks like:
In April 2017
State Bank Of India merged its six associate banks in April 2017: State Bank of Bikaner And Jaipur + State Bank of Hyderabad + State Bank of Patiala + State Bank of Mysore + State Bank of Travancore + Bharatiya Mahila Bank
In April 2019
Vijaya Bank and Dena Bank merged with Bank of Baroda in April 2019.
In April 2020
Oriental Bank of Commerce and United Bank of India merged with Punjab National Bank in April 2020.
Others include:
- Canara Bank with Syndicate Bank
- Union Bank of India with Andhra Bank and Corporation Bank
- Indian Bank with Allahabad Bank
Future Merger Expectations
The government aiming to reduce the number of Public Sector Banks from 12 to around 6-7 large, competitive banks through phased mergers, focusing on stronger balance sheets and better lending capacity, especially to support infrastructure projects.
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