SBI, PNB, BOB Merger Update: Government Evaluates Big Merger Plans for PSU Banks

SBI, PNB, BOB Merger Update: Government Evaluates Big Merger Plans for PSU Banks

According to the latest ongoing discussions within the Finance Ministry, the government is exploring multiple merger combinations to strengthen PSU banks and create a more stable, tech-driven banking ecosystem.

One of the key proposals under review includes a possible merger between Union Bank of India and Bank of India (BOI). If approved, this new entity would become the second-largest public sector bank after SBI.

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This time, the government’s focus is not just on merging balance sheets. It is also considering significant changes in banking operational processes, technological systems, and internal controls of PSU banks to build stronger institutions with nationwide efficiency.

Possible Merger Combinations Under Consideration

The government aims to further consolidate the remaining mid-sized and small PSU banks. Several options are being evaluated:

1. First Option – Smaller PSBs Merging with Bank of India

Under this plan, banks with smaller balance sheets such as UCO Bank, Central Bank of India, Indian Overseas Bank (IOB), and Bank of Maharashtra could be merged into Bank of India, which already has a book size of over ₹6 lakh crore.

2. Second Option – Mergers Based on Technology or Region

This approach groups banks by similar technology stacks or geographical networks.
Possible pairings include:

• UCO Bank + Central Bank of India → Punjab National Bank
• Bank of India + Union Bank of India
• Indian Overseas Bank + Indian Bank

3. Third Option – Size-Based Merger

If the primary goal is size and competitiveness, a direct merger between Bank of India and Union Bank of India is considered the strongest possibility.

Second Phase of Merger Plan: Who Joins Whom?

Media reports indicate that in the next phase of consolidation, banks like Indian Overseas Bank, Central Bank of India, Bank of India, and Bank of Maharashtra may be merged into larger institutions such as Punjab National Bank (PNB), Bank of Baroda (BOB), and State Bank of India (SBI).

These mergers may be finalized depending on financial performance, technological readiness, and strategic suitability.

PSU Bank Mergers So Far

India has already undergone major consolidation over the last decade:

• 2017: SBI merged five of its associate banks and Bharatiya Mahila Bank.
• 2019: Bank of Baroda absorbed Vijaya Bank and Dena Bank.
• 2020: Punjab National Bank merged with Oriental Bank of Commerce and United Bank of India.

As the government prepares for the next consolidation wave, the key question remains: Which PSU banks will be merged next, and what will India’s banking landscape look like after the restructuring?

For now, the proposals are under evaluation, but one thing is clear—the banking sector is going toward fewer, stronger, and more tech-enabled public sector banks.