Possibilities that open up with merging of banks

India's largest public sector bank, State Bank of India, entered the list of the world's largest banks after merging associate banks and Bharatiya Mahila Bank with SBI. State Bank of India, which is ranked 43rd in the global ranking, has assets of Rs 66.8 lakh crore. Reports indicate that the Union Finance Ministry has initiated a move to reduce the country's 12 public sector banks to three on the basis that this merger has become a big success. The central government is likely to move towards the merger of public sector banks by the end of the current financial year. The move is to merge other public sector banks into SBI, Canara Bank and Punjab National Bank. The government plans to bring at least two Indian banks in the top 20 banks globally. The aim is to enable Indian banks to provide financial assistance for large projects.

Bank mergers were earlier carried out in 2017 and 2019. There were 27 public sector banks in the country in 2017. Five associate banks including SBT and Bharatiya Mahila Bank were merged with SBI in 2017. The number of public sector banks was reduced to 12 through mergers again in 2019. The government is now planning to reduce this to three. According to reports, the SBI group will include Bank of Maharashtra, UCO Bank, and Punjab and Sind Bank. Union Bank, Indian Bank, and Bank of India will be made part of Canara Bank. The third group is led by Punjab National Bank. It will include Bank of Baroda, Central Bank of India, and Indian Overseas Bank.

The employees' organizations oppose the merger of banks mainly on the grounds of job loss and relocation. Employees are given the opportunity to take VRS every time there is a merger. Many people take VRS and leave. However, the bank management does not hire more employees to replace them. This increases the workload and puts the employees under severe mental stress. The government should consider these issues before proceeding with the merger.

Meanwhile, bank mergers will help in financing large projects as India is becoming one of the world's major economic powers. Similarly, Indian banks also need to adapt to the way other big banks in the world operate. For this purpose, the central government is considering private sector professionals for top positions in public sector banks. It is expected that the merger of banks and the entry of excellent professionals into this sector will lead to an increase in the potential of the banking sector.