Bank Merger Update: The central government is once again preparing a roadmap for major changes in the public banking structure. According to reports, the government is formulating a new strategy for the future of six public sector banks, which could involve merging them among themselves or with a stronger, larger bank. Policymakers aim to create large banking institutions that are not only strong domestically but also strengthen India’s presence in the global top 100 list of banks.
The Indian banking sector is growing rapidly globally, but further strengthening is needed to compete globally. The country’s largest bank, SBI, is already supporting the idea that strong and large bank groups are the future. The government is currently preparing to take decisive steps regarding Bank of India, Indian Overseas Bank, Central Bank of India, Bank of Maharashtra, UCO Bank, and Punjab & Sind Bank.
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The government’s plan aims to make the banking system more efficient. Mergers will strengthen banks’ capital positions, improve risk management, and facilitate NPA control. Increased investment in digital services will provide modern and faster services to customers. Additionally, large banks will become more internationally competitive, strengthening the Indian banking system’s global presence.
Over the past three decades, the public banking structure has undergone several major mergers. In 2017, SBI merged its associate banks and Bharatiya Mahila Bank to form a large banking group. Subsequently, in 2019, Bank of Baroda acquired Vijaya Bank and Dena Bank. During the same period, PNB acquired OBC and United Bank. Canara Bank merged with Syndicate Bank, Union Bank merged with Andhra Bank and Corporation Bank, and Indian Bank merged with Allahabad Bank. These major changes have reduced the number of public sector banks from 27 to 12.
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Although the government hasn’t yet explicitly shared any bank names or deadlines, industry sources say a major and impactful merger could be announced by April 2026. The Finance Ministry is considering moving the process forward in two or three phases rather than implementing it all at once.