The picture of government banks in the country is going to change. After about 5 years, the government is considering a big restructuring plan. In this, some small PSU banks can be merged into some big government banks. According to sources having knowledge of the matter, the government can merge small PSU banks like Indian Overseas Bank, Central Bank of India and Bank of India with big public sector banks like PNB, BOB and SBI.
Final plan may come in the next financial year
The government has not yet made an official announcement regarding the restructuring plan of PSU banks. According to sources, preliminary talks are currently taking place on this proposal. Talks in this regard are expected to continue in the next financial year also. However, the government will present the final roadmap of the restructuring plan in the next financial year itself. The government plans to create some big government banks in place of many small PSU banks. The government believes that this is necessary for the next phase of economic growth.
There will be many benefits from big government banks
Restructuring of PSU banks will increase the flow of credit to the industry. There will be improvement in the operational efficiency of banks. There will be reduction in administrative work. Also, government banks will be able to give tough competition to private and fintech players. Experts say that credit flow for infrastructure will be better. Big government banks will be able to give loans to big infrastructure projects. NITI Aayog has advised the government to carry out reforms in the banking sector.
NITI Aayog has advised banking reforms
NITI Aayog had said in its recommendation that only some big public sector banks like SBI, PNB, BOB and Canara Bank should be under the control of the government. He had said that the government can think about privatization, restructuring or merger of small government banks like IOB and CBI. According to sources, the recommendations of NITI Aayog have also been taken into consideration in the current plan of the government. However, according to the needs of the economy, the government can make some changes in the final restructuring plan.
Banks were merged between 2017-2020
Earlier, between 2017 and 2020, the government had merged some small PSU banks into some big public sector banks. Due to this the number of government banks was reduced from 27 to 12. Then Oriental Bank of Commerce (OBC) and United Bank of India were merged into PNB. Syndicate Bank was merged with Canara Bank. Andhra Bank and Corporation Bank were merged into Union Bank of India (UBI). Allahabad Bank was merged with Indian Bank.