Finance Minister Nirmala Sitharaman announced the merger of ten public sector banks into four banks. This decision has been made to salvage loss making banks.
The government has wanted to merge banks for a very long time. They however waited because they were afraid of Unions. Ever since PM Modi came to power, he has speedened the process of bank merger. Last year, the government had approved the merger of Vijaya Bank and Dena Bank with Bank of Baroda (BoB). In 2017, the State Bank of India merged with five associate banks and the Bharatiya Mahila Bank.
State Banks have suffered big losses due to defaults by large establishments. During 2018-2019 only 4 banks made a profit. Now in 2019-2020 fourteen banks are making a loss.
Inorder to take control of the situation, Finance Minister Nirmala Sitharaman on 30th August 2019 announced a big merger of public sector banks. Ten public sector banks will merge into four.
Indian Bank will merge with Allahabad Bank, Punjab National Bank will merge with Oriental Bank of Commerce, Union Bank of India, Andhra Bank and Corporation Bank will merge and Canara Bank and Syndicate Bank will merge.
In 2017, there were 27 Public sector banks, now there will be 12. The government has announced to provide a total of ?55,000 crore funds to public sector banks. The government has ordered banks to make sure banking activities goes on smoothly and the process of loans are not affected. The Government has promised there will be no cost cutting in terms of salary reduction or firing. Bank employees fear retrenchment. They decided to merge the banks in order to make them stronger. They will match standards of international banks. These banks will be able to provide funds to the entire country.