Punjab National Bank and Union Bank of India on Monday said they have received in-principal approval from the government for their amalgamation with other public sector banks. "Bank has received a letter dated November 13, 2019 from Department of Financial Services, Ministry of Finance vide which bank has been advised that Alternative Mechanism (AM), has accorded in-principle approval to proposed amalgamation of Oriental Bank of Commerce and United Bank of India into Punjab National Bank," Punjab National Bank said in a regulatory filing.
Punjab National Bank is the transferee bank and Oriental Bank of Commerce and United Bank of India as transferor banks. In a separate filing, Union Bank of India said, "The bank has received a communication from ministry of finance on November 16, 2019 stating that the alternative mechanism has accorded in-principle approval to proposed amalgamation of the Andhra Bank and Corporation Bank into Union Bank of India".
Union Bank of India is the transferee bank, and Andhra Bank and Corporation Bank are the trasferor banks. The government in August had announced four major mergers of public sector banks, bringing down their total number to 12 from 27 in 2017, a move aimed at making state-owned lenders global sized banks.
According to this, United Bank of India and Oriental Bank of Commerce will be merged with Punjab National Bank, making the proposed entity the second largest public sector bank (PSB). Syndicate Bank will be merged with Canara Bank Indian Bank will be merged with Allahabad Bank.
In January this year, the Union Cabinet had approved merger Dena Bank and Vijaya Bank with Bank of Baroda. The merger came in to effect from April 1. With these mergers, the number of PSBs will come down to 12 from 27 in 2017.
Prior to this, the government had merged five associate banks of SBI and Bharatiya Mahila Bank with State Bank of India. These were State Bank of Patiala, State Bank of Bikaner and Jaipur, State Bank of Mysore, State Bank of Travancore and State Bank of Hyderabad and also Bharatiya Mahila Bank effective April 2017.