In Indian banking sector Mergers and acquisition has become admire trend throughout the country. A large number of public sector banks and other banks are engaged in mergers and acquisition activities in India. The main motive behind mergers in the banking sector is to harvest the benefit of economics of scales. Mergers can be a large source of growth in any economy but particularly in one that’s comparatively stagnant and mired in deep uncertainty.

1. MERGER OF PUBLIC SECTOR BANKS
&
IT’S IMPACT
ON PRIVATE SECTOR BANKS
SECTION – 5 , GRP - 4
Presented By-
ADRIJA DUTTA - 160798
ANKUSH PAL - 160813
SAYANTI CHAKRABORTY -160810

2. INTRODUCTION
• In Indian banking sector Mergers and acquisition has become admire
trend throughout the country.
• A large number of public sector banks and other banks are engaged in
mergers and acquisition activities in India.
• The main motive behind mergers in the banking sector is to harvest the
benefit of economics of scales.
• Mergers can be a large source of growth in any economy but particularly
in one that’s comparatively stagnant and mired in deep uncertainty.

3. BANKING MERGER IN INDIA
• The finance minister Ms. Nirmala Sitharaman had announced the merger of 10
public sector banks into four on august 30, 2019.
• This merger is approved by the union cabinet on 4 march 2020. The merger
would be effective from april 1, 2020.
• Now the number of public sector banks would be reduced to 12 from 27 of 2017.
In the month of august 2019, the finance minister of India Ms. Nirmala
Sitharaman has announced to merged 10 public sector banks into four entities.
• The basic logic behind this merger is to increase the global competitiveness of
the Indian banks.
Now the total public sector banks reduced to 12 from 27 in 2017 in India.

4. Benefits of Banking Merger
• 1. After these mergers, the lending capacity of the Public Sector Banks will increase
and their balance sheet would also be strong.
• 2. These big banks would also be able to compete globally and increase their
operational efficiency by reducing their cost of lending.
• 3. India needs investment in huge quantities to turned India into a 5 trillion
economy. If banks have sufficient money to fund big projects than the economic
development of the country would speed up.
• 4. The merger would help in better management of banking capital. So after the
merger of the 10 PSBs in the four major banks seems a good step in ensuring the
availability of the money for the investment purpose in the country.
So after the merger of the 10 PSBs in the four major banks seems a good step in ensuring the availability of
the money for the investment purpose in the country.

5. MERGER LIST OF PUBLIC SECTOR BANKS
IN
INDIA
1. Punjab National Bank(PNB)
2. Indian Bank
3. Canara Bank
4. Union Bank
5. Bank of Baroda
6. State Bank of India Banks
1. Oriental Bank of Commerce and United
Bank of India
2. Allahabad Bank
3. Syndicate Bank
4. Dena Bank and Vijay Bank
5. State bank of Hyderabad, State bank of
Mysore, State bank of Bikaner & Jaipur,
State bank of Patiala, State bank of
Travancore, Bhartiya Mahila bank
Acquirer Banks Banks to be Merged

7. Oriental Bank of Commerce (OBC) and
United Bank of India (UBI) are merged
with the Punjab National Bank (PNB). So
after this merger now the PNB will be the
second-largest Public Sector Banks of India
after the State Bank of India in terms of the
branch network.
Its total branches would be 11,437 and the total
Business of the PNB would be Rs. 17.95 lac
crore.

9. Syndicate Bank is merged with the Canara
Bank. After this merger; the Canara bank
would be the fourth largest Public Sector of
India.
The total business of Canara would be 15.20
lac crore with a branch strength of 10,342.

11. Andhra Bank and Corporation Bank
are merged with Union Bank of India.
This merger would make Union Bank
of India 5th largest Public Sector
Bank.
This merger would have the
potential to increase the post-merger
bank’s business by 2-4.5 times.

13. In the fourth merger, the Indian bank
would be merged with the Allahabad
Bank. after the merger, Allahabad bank
would be the 7th largest Public Sector
Bank of India.
After the merger, the total business
of Allahabad bank would be Rs.
8.08 lac cr and the number of
branches would be 6,104.

15. • Mergers seek to improve Income from services.
• The government’s move to consolidate 10 public sector banks into four large ones is sensibly aimed at
improving operating efficiency, governance and accountability and facilitate effective monitoring.
• The mega-merger involves integration of six weaker PSU banks with four better performing ‘anchor’
banks.
• The rationale is evident—banks saddled with bad loans or weak operating metrics are to be integrated
with stronger, more efficient banks.
• Besides, banks working on a similar technology platform (core banking solutions) are being merged to
ensure smooth integration.
• To support this consolidation, the government will be infusing capital into the anchor banks so that
transition does not translate to sacrificing growth.
Reason for mergers banks

16. 1. Mergers may make it difficult for private banks to gain faster market share as most anchor
banks are large.
2. Merger helps to reduce the cost of operation in public sector bank. As a result the acquisition
of customer in private bank for low operation cost will hamper.
3. Merging Provides better efficiency ratio for business operations as well as banking operations
like private banks . As a result when customer will get same facilities from public sector then
they will not come into the private banks.
4. Merger sees a bigger capital base and higher liquidity and that reduces the government's
burden of recapitalizing the public sector banks time and again.
IMPACT
ON PRIVATE SECTOR BANKS …

17. • Bank consolidation is a tricky issue.
• While it is said that the long term benefits of consolidation outweigh the
short term concern, it must not be made a general policy.
• It is only to be done with right banks for right purpose with proper
safeguards.
CONCLUSION: