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Mega bank reforms: Finance Minister Nirmala Sitharaman announces 4 state-run banks mergers

File photo of Nirmala Sitharaman. Photograph:( ANI )

WION Web Team New Delhi, India Aug 30, 2019, 04.48 PM (IST) Edited By: Sparshita Saxena

Finance Minister Nirmala Sithraman on Friday announced four state-run banks mergers. India will now have 12 Public Sector Banks from 27.

While Punjab National Bank, Oriental Bank of Commerce and United Bank will merge, Sitharaman announced merger plans of three other PSU banks.

Canara Bank and Syndicate Bank will merge; Union Bank of India, Andhra Bank and Corporation Bank will come together while Indian bank will merge with Allahabad Bank.

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Together, Punjab National Bank, Oriental Bank of Commerce and United Bank merger shall form the second largest public sector bank with the business of Rs 17.95 Lakh Crore, Sitharaman added. 

The Canara Bank merger with Syndicate Bank will be the fourth largest Public Sector Bank with a business of Rs 15.20 lakh crores.

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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.

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During her address, the finance minister stated that the Gross Non Performing Assets have come down from 8.65 lakh crores to 7.90 lakh crores.

"Specialised agencies have been set up who are monitoring every loan which is over Rs 250 crores," she said, adding that loan recoveries have hit a recover level of Rs.1,21,076 crore.

Finance secretary Rajeev Kumar said that there has been no retrenchment so far and that there is no of the same. 

"The benefits of employment and HR will improve, with amalgamation the best combination will be taken up," he said. 

Just yesterday, the Reserve Bank of India in its annual report revealed that the number of frauds reported by banks has shot up by 15 per cent in the financial 2018-19 on a year-on-year basis. 

The amount involved in such frauds rose by 73.8 per cent, though mostly related to occurrences in earlier years. The banking sector reported 6,801 frauds involving Rs 71,542.93 crore in the financial year 2018-19 as opposed to 5,916 cases involving Rs 41,167.04 crore reported in the previous financial year.

"The average lag between the date of occurrence and its detection by banks was 22 months," while the "average lag for large frauds, i.e. Rs 1 billion and above, amounting to Rs 522 billion reported during 2018-19, was 55 months," the top bank stated in its report which was uploaded on its website. 

The bulk of frauds reported in 2018-19 come from bank groups PSBs that constitute the largest market share in bank lending, followed by private sector banks and foreign banks. 

Story highlights

While Punjab National Bank, Oriental Bank of Commerce and United Bank will merge, Sitharaman also announced merger plans of three other PSU banks.