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The Union Government is all set to announce more bank merger in the coming week. Once annoucement is made, board members of these banks will give approval for the same. Each bank which is to be merged has to follow regulatory norms to protect minority stakeholders’ interests. Centre is likely to merge 10 Public Sector Banks into 4. The banks will need to follow regulatory formalities to protect the interest of minority shareholders. Let’s dig deep inside.
What is Bank Merger?
A condition in which two or more banks pool their assets and liabilities to become single bank to have a significant impact on the finance of the nation.
Which Banks Are To Be Merged?
This time government is all set to notify following bank merger:
- Punjab National Bank (PNB) will merge with United Bank of India and Oriental Bank of Commerce (OBC)
- Canara Bank will amalgamate with Syndicate Bank.
- Union Bank of India will be merged with Andhra Bank and Corporation Bank
- Indian Bank will be combined with Allahabad Bank
The four anchor banks are PNB (Punjab National Bank), Union Bank of India, Canara Bank and Indian Bank.
Impact of Bank Mergers
Bank Merger has its own merit and demerits. Let’s have a look at the pros and cons of bank merger.
Merits of Bank Merger
- A big capital base will be gained and would help banks to offer larger loan amount
- Service of banks will be improved
- Recapitalization will reduce
- Customer will have wider products to choose from.
- Technology will be enhanced for carrying out such process.
Demerits of Bank Merger
- It is going to be a tough call as management will become hectic.
- It can enhance financial risk
- The local identity of small banks will be lost
Concluding the above information, we can say that there is a need to look dipper into the issue. Although the government step can give us a better result if implementation is done in a comprehensive manner.
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