Public Sector Banks PNB, BOB's Merger on cards after SBI

After the merger of 5 associate banks and Bharatiya Mahila Bank with State Bank of India (SBI), the government is planning for the next round of consolidation by allowing Punjab National Bank (PNB) and Bank of Baroda to take over smaller lenders. The proposed bank consolidation is aimed at increasing operational efficiencies and managing the affairs of the lenders.

Upcoming Mergers under consideration :

o             Punjab & Sind Bank can be merged into Punjab National Bank.

o             Bank of Baroda is ready to take over some turnaround banks in the southern region, like Indian Overseas Bank.

The Economic Times reported that the government was actively looking for consolidation with the Prime Minister's Office keen on having a few large banks rather than several smaller ones.

This is not the first time the government is considering the merger option. Earlier, the cabinet approved the merger of State Bank of India with its five subsidiaries. While approving the proposal, Finance Minister Arun Jaitley said: "This merger will lead to far greater operational efficiency and synergy of operations. When the cost of operations comes down, the cost of funds will come down."