In a move to restructure and redefine the country's banking space, in 2021, the government of India merged 10 Public Sector (PSU) Banks into 4 banks.
A merger is an agreement between entities where they pool in their assets and liabilities and become one entity. The merger of Public Sector Banks (PSBs) is where the PSBs are merged with 'anchor' banks. As of today, India has 12 Public Sector Banks, including Bank of Baroda and State Bank of India.
List of Merged Banks in 2021
| Anchor Bank | Banks Merged |
| Punjab National Bank |
|
| Canara Bank |
|
| Indian Bank |
|
| Union Bank of India |
|
| Bank of Baroda |
|
| State Bank of India |
|
* Vijaya Bank and Dena Bank were merged with Bank of Baroda from April 1, 2019
*State Bank of India was merged with its associate banks and Bharatiya Mahila Bank in 2017.
Merits of Public Sector Bank Mergers
- The bank's service delivery will see a huge improvement.
- Mergers enable a large capital base that will aid the acquirer to offer a bigger loan amount.
- Customers of the bank will have a much wider range of products they can choose from in mutual funds, insurance products, loans and deposits.
- The need for recapitalisation from the government will reduce after a merger.
- The bank will have an opportunity to establish technological advancements in their processes.
