History of Bank Mergers

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History of Bank Mergers

Today we will read about the bank merger in this article and learn what has been the history of bank mergers and acquisitions in India. When an economy becomes obliged to merge banks, it will also try to know. Right now the topic of Bank Merger is very much discussed. In this article, we will try to know what the PCA Framework is and what rights of Indian banks the RBI gets after coming into the PCA framework. 

Role In 1969, the Indira Gandhi government changed the picture of the banking sector of the country. First 14 and then in 1980 some more private banks were made government. There is no doubt that after the acquisition of banks, bank system reached remote areas and people and people got a strong and reliable system of savings and government relief. But now these government banks are facing trouble. As of December 2017, about 9 lakh crore rupees in these Indian banks. More than NPA has been done, which is breaking the back of public sector banks.

The loss of banks is also increasing due to NPA. The second problem is also the cost of operating, which is not taking the name of reduction and the margins of banks on services are also steadily decreasing. The question is how to get the banks out of this problem? Due to this, the government has tried to move forward on the path of merger of banks. Last year, the merger of SBI and its associate banks was a major step. In this episode, the government is now trying to change the appearance of banking system by merging some more big banks. Today, we will tell in this article which banks are trying to merge.


Why is the government going to take this step and how is NPA related to this?
On August 30, 2019, the Government of India has decided to merge some banks together, as a result of which only 12 government banks will remain in the country. Be aware that this number used to be 27 in 2017. 


Merge with Whom  

  • Punjab National Bank, Oriental Bank of Commerce and United Bank will be merged and will become the second largest bank in the country.
  • Canara Bank and Syndicate Bank will be merged.
  • Andhra Bank and Corporation Bank will merge with Union Bank of India.
  • Indian Bank will be found in Allahabad Bank.

History of Bank Merger in India 

Mergers and acquisitions have emerged as major issues of discussion between institutions in the global market over the past few years. Mutual merger of small or loss-making institutions or merging them into larger institutions has been happening in every economy of the world. This is not a new idea especially in the banking sector. In Germany, losses incurred due to submerged debt were merged with larger banks. In India also this process is being adopted for years. According to the statistics of the Indian Banks' Association, since 1985, 49 small and big mergers have taken place in the country.

Some important examples of these mergers are the following - 
  • In 2017, State Bank of India's associate banks (State Bank of Patiala, State Bank of Travancore, State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Mysore, Mahila Bank) merged into SBI.
  • In 2010, State Bank of Indore merged with SBI.
  • In 2008, State Bank of Saurashtra merged with SBI.
  • In 2004, there was a merger between Oriental Bank of Commerce and Global Trust Bank. Punjab National Bank and New India Bank merged in 1993–94 - it is also called the first merger of two national banks.
  • There have been many mergers in small scale banks. This included Hindustan Commercial Bank merger with Punjab National Bank, Kashinath State Bank of India merged with SBI, Banaras State Bank merged with Bank of Baroda, HDFC's acquisition of Centurion Bank of Punjab, ING Vysya Bank with Kotak Mahindra Bank. 

There are many examples of merger etc. Public bank There are a total of 21 public sector banks in the country.
These banks account for 90% of the total NPA of the banking sector.

Public bank

  • About 8.9 lakh crores of public sector banks. Have drowned.
  • During the financial year 2017-18, Indian banks received around Rs 12 lakh crore. Had to write off the loan Write off means that these banks have assumed that these loans will never be able to recover now.
  • During this period, the country's largest public bank SBI received 40,196 crore rupees. Had to write off. 
Benefits of Bank Merger

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