MERGER OF PSBs TO MAKE 'MEGA BANKS'

[MOHAN P]

Just for information:

The number of  existing 12 Public Sector Banks (PSBs) in India, which have been consolidated down from a larger number through a series of government mergers may be further reduced   into three larger "Mega Banks" has been widely discussed and reported in the financial press, though no official plan for this specific configuration has been announced as of late 2025. 

What the PSB merger plan entails

The concept of reducing India's state-owned banks to a handful of large, globally competitive institutions has been around for years. 

Financial news reports in 2025 indicated that the government was considering further consolidation of the 12 PSBs into three or four large banks as part of its "Viksit Bharat 2047" plan. The goal is to create stronger, more competitive banks with a larger global presence. 

Potential bank combinations

While no official mergers have been decided, financial analysts and reports have speculated on how the banks might be combined. 

One potential scenario involves grouping banks based on their size or technological compatibility:

• Mid-tier banks: One group could combine mid-sized lenders such as UCO Bank, Central Bank of India, Punjab & Sind Bank, and Bank of Maharashtra.
• Large banks: Another group could merge some of the larger PSBs, such as Canara Bank, Indian Bank, and Union Bank.
• SBI plus others: Other potential super-groups are also speculated, but merging giant banks like the State Bank of India (SBI), Punjab National Bank (PNB), Bank of Baroda (BoB), and Bank of India (BoI) is considered a more difficult and complex regulatory proposition. 

Past bank consolidations

The move to reduce the number of PSBs has been ongoing for several years:

• 2017: The government merged five associate banks of the State Bank of India (SBI), along with the Bharatiya Mahila Bank, into SBI.
• 2019-2020: In a major consolidation effort, ten PSBs were merged into four anchor banks—Punjab National Bank, Canara Bank, Union Bank of India, and Indian Bank—bringing the total number of PSBs down to 12.