All of those mentioned here will be merged now with larger banks.
She also said in the press conference that the merged entities will have an enhanced risk appetite, thrust on next-gen technology for banking, wider offerings with enhanced customisation, and better ability to raise resources from the market.
The merger between Union Bank of India, Andhra Bank and Corporation Bank shall become the fifth largest public sector bank now whereas Indian Bank amalgamation with Allahabad Bank will be the seventh-largest Public Sector Bank with a business amounting to Rs 8.08 lakh crores.
In the biggest consolidation exercise in the banking space, the government on Friday 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.
Also Indian Bank will be merged with Allahabad Bank to form country's 7 largest PSB with a business of Rs. 8.08 trillion.
In a major overhaul, Finance Minister Nirmala Sitharaman has announced the consolidation of several public sector banks (PSBs) in India.
Last week, she had announced that the Rs 70,000 crore capital infusion for PSBs for the current fiscal would be front-loaded.
India Ratings head of financial institutions Prakash Agarwal said the mergers are mostly among larger banks, with absorbing bank not necessarily in strong health.
The FM added that the mergers will not have any effect on customers. Similarly, Canara Bank and Syndicate Bank will be merged, Union Bank of India will absorb both Andhra Bank and Corporation Bank. Rs 3,300 crore liquidity support has been given and Rs 30,000 crore is in the pipeline. To strengthen the regional presence, Sitharaman announced that Indian Overseas Bank will continue its operations in the south, UCO Bank will keep operation in east and the Punjab and Sindh bank will continue with 1.71 lakh crore business in the north.
Narang added though he was hopeful that measures announced this month by Modi's newly re-elected government would give the economy a boost in the coming quarters. However, Sitharaman said that these are only approximate figures.
The government has injected roughly $36 billion rupees of taxpayers' money into state-run banks over the last five years to revive the sector.
"Also it is likely that management attention and bandwidth of the entities being merged could get split impacting loan growth and reduced focus on strengthening asset quality in the short-term", Agarwal said. It has allowed them to hire external chief risk officers and to provide them market-linked compensation.