New Delhi: In a move aimed at providing liquidity and stability to the economy, Union Finance Minister Nirmala Sitharaman on Friday announced the consolidation of Punjab National Bank (PNB), Oriental Bank of Commerce, and United Bank of India (UBI). PNB will be the anchor bank.
The finance ministry has set aside Rs 16,000 as capitalisation for PNB.
Sitharaman said the earlier bank mergers had shown that consolidated banks had shown rapid growth, high profit and valuation gains as a result of scale and synergy benefits. She said the merger of PNB with OBC and United Bank will make it the second-largest public sector bank (PSB), with Rs 18 lakh crore business and second-largest branch network in India.
Sitharaman said banks would play an important role in making India a $5-trillion economy — for that they needed more lending capacity so they could provide better services using modern technology. "Consolidation is the way forward," she said.
At the same press briefing, Finance Secretary Rajeev Kumar said there will be no retrenchment due to the merger and every employee will benefit from it.
Sitharaman said that with this merger, the bigger banks would focus on international markets while middle-level banks would focus on the national market. The smaller banks would now focus on the regional markets, she added.
Sitharaman said that while there were 27 PSBs in 2017, there would be only 12 banks from now on, which will be adequately financed.
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