New Delhi: Finance minister Nirmala Sitharaman announced measures to reform public sector banks (PSB). As the first step, she announced the merger of public sector banks.

Accordingly, Punjab National Bank, Oriental Bank of Commerce and United Bank have been merged into one; Syndicate Bank has been merged with Canara Bank; Union Bank of India, Andhra Bank and Corporation Bank also have been merged into one and Indian Bank has been merged with Allahabad bank.

With this the number of PSBs has come down to 12 from 27 since 2017.  

Under the Narendra Modi’s tenure two set of PSBs were merged. Five associate banks and Bharatiya Mahila Bank merged with State Bank of India in April 2017; Dena Bank, Vijaya Bank merged with Bank of Baroda on April 1, 2019.

Loan recovery

Sitharaman also said that loan recovery has gone up from Rs 77,000 crore in 2018 to Rs 1,71,676 crore currently.

Minister Sitharaman also said that the gross non-performing assets (bad loans) have come down from Rs 8.65 lakh crore to Rs 7.9 lakh crore.

Measures to reform PSBs

Other measures taken to reform the PSBs include, board committee of public sector banks to appraise the performances of officers at the managerial level, banks to recruit chief risk officers from the market, boards to create a system of individual development plan for succession plan.

As per Banking Companies (Acquisition and Transfer of Undertakings) Acts of 1970 and 1980, the centre has to consult the RBI before formulating a plan for PSB merger.