Mumbai: Union Finance Minister Nirmala Sitharaman announced Friday that several public sector banks would be merged to energise and consolidate their values as the country aims to achieve US 5 trillion dollar economy.
After the merger of banks, the number of public sector banks will come down from 27 in 2017 to 12.
The second largest banking conglomerate will now be a united Punjab National Bank, the Oriental Bank and the United Bank with a business of Rs 17.95 lakh crore. “That is 1.5 times the business of PNB,” she said. The merged entity will now have 11,431 branches in the country.
She said the creation of next-generation banks was imperative for India to become a global player and achieve economy targets in the next five years.
Sitharaman also announced that Canara Bank will merge with Syndicate Bank, Union Bank of India with Andhra Bank and Corporation Bank and the Indian Bank with Allahabad Bank.
Announcing a host of steps to empower the public sector banks, the Finance Minister said that a board committee of nationalised banks will appraise the performance of general managers and higher positions.
She also said that chief risk offers will be recruited at market-linked compensation to attract best available talent.
The Finance Minister also said that recoveries have been robust this year and stood at Rs 121,076 crore.
Non-performing assets have also been brought down from Rs 8.65 lakh crore to Rs 7.9 lakh crore, she said.
The mega merger announcement comes a day after the Reserve Bank of India reported that frauds in the banking system increased 74 per cent to Rs 71,543 crore in financial year 2018-19.
The RBI also said the average lag between the date of occurrence of frauds and its detection by banks was at 22 months.
The government has made several announcements in the last few days, including rolling back big-ticket Budget measures to steady India’s flailing economy. It has reversed decision of higher taxes on foreign investors and eased FDI or foreign direct investment in four sectors....