Exclusive! Mega PSU banks' merger to get delayed by at least 6 months, says source

The mega-merger of 10 public sector banks into four large banks announced last year will not see the light of the day until Oct 1, a senior finance ministry official who didn't wish to be quoted told Zee Business in an exclusive interaction. The deadline for the merger, which is April 1, 2020, is difficult to meet in view of additional capital requirement and regulatory processes, as per the source.

"We are analysing branch integration, employees' future and other regulatory procedures for the merger. Additional capital may also be required for implementing the merger. Considering these factors, the deadline of April 1 is difficult to be met," the source added.

Meanwhile, the cabinet is likely to approve the government's announcement made on PSU banks' merger in its next meeting, according to sources. Recently, Finance Minister Nirmala Sitharaman had said that there was no reason to go back on merger plans or delay in the notification.

Last year, Sitharaman had announced the merger of 10 public sector banks into four large banks. According to the government's plan, Punjab National Bank will merge with United Bank and Oriental Bank of Commerce, Syndicate Bank to merge with Canada Bank, Allahabad with Indian Bank,  while Andhra Bank, Corporation Bank will be consolidated with Union Bank of India.

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The economic survey had also laid emphasis on large banks. Chief economic Adviser K Subramanian said that the size of Indian banks needs to scale up in the proportion of the economy.