PSU Bank Merger: SBI, PNB, Baroda Bank Not Merging With Canara, BOI, BOM, Indian Bank; How PSB Stocks Reacted?

The PSU bank shares on September 18 are unaffected by the fake alert that claimed SBI, PNB and Bank of Baroda will acquire at least nine smaller-sized state-owned banks like Bank of India, Bank of Maharashtra, Indian Bank, Canara Bank, Union Bank of India, Punjab & Sind Bank, among others. It needs to be noted that PSU bank mergers have been a key agenda of the government, but the latest buzz around them is called to be fake and inaccurate. PIB has debunked the claims through its fact-check alert.

PSU Bank Shares Today

At the time of writing, the Nifty PSU index surged by 0.34% or 28.75 points to trade at 8,291.55. Among top gainers, Bank of Maharashtra surged by nearly 3% to trade at Rs 82.87, while Central Bank of India rose by 2.2% to trade at Rs 31.08 apiece. SBI also gained marginally to trade around Rs 991.90 apiece. Meanwhile, PSU banking stocks like PNG, Bank of Baroda, UCO Bank, Indian Bank, Indian Overseas Bank, and Punjab & Sind Bank traded marginally higher to 0.51%.

On the contrary, shares of Union Bank of India and Canara Bank traded marginally lower.

Fact Check: PSU Bank Merger

In its fact check, PIB which is the government-backed news portal, said, "Fake document circulating regarding amalgamation of public sector banks."

Under the fake document, which is shown as the Gazette of India by Ministry of Finance, claims that the government has formed a new amalgamation scheme and structure.

The fake document claims that smaller PSU banks like Indian Bank, Bank of Maharashtra and Central Bank of India will be merged with State Bank of India. It claims that these three banks will become part of SBI Group.

Meanwhile, the document also claims that PNB will acquire Union Bank of India, Bank of India and Punjab & Sind Bank. While Bank of Baroda will acquire Canara Bank, Indian Overseas Bank and UCO Bank.

The fake document claims that the entire undertaking of the merging entities, such as rights, powers, claims, privileges, employees, customer accounts, contracts, bonds, banking agreements, and others, will become part of acquiring entities.

Calling the claims and the Gazette as FAKE, PIB said, "A document circulating on social media, purportedly issued by the Ministry of Finance, claims that the Central Government has notified a scheme for the amalgamation of Public Sector Banks."

Fact Check: Firstly, PIB stated that the document is fake and is not issued by the Finance Ministry.

It guided citizens to always verify claims and documents. It said, "Always verify such information through official and credible sources before believing or sharing it."

PSU Bank Mergers

It needs to be noted that PSU bank mergers and amalgamations have been part of the government's plan for more than a decade now. The goal is to have fewer but stronger PSU banks to compete in the global financial market. In more than three decades, the Indian financial system has seen significant transformation, and the merger of two or multiple banks to form one uniform and strong bank is part of this paradigm shift.

Some of the notable PSU bank mergers are:

April 2017: SBI + State Bank of Bikaner And Jaipur + State Bank of Hyderabad + State Bank of Patiala + State Bank of Mysore + State Bank of Travancore + Bharatiya Mahila Bank

April 2019: Bank of Baroda + Vijaya Bank + DENA Bank

April 2020: Punjab National Bank + Oriental Bank of Commerce + United Bank of India

April 2020: Canara Bank + Syndicate Bank

April 2020: Union Bank of India + Andhra Bank + Corporation Bank

April 2020: Indian Bank + Allahabad Bank

Which PSU Banks Are Yet To Be Merged?

• Bank of India

• Indian Overseas Bank

• Bank of Maharashtra

• UCO Bank

• Punjab & Sind Bank

• Central Bank Of India

Since April 2020, there has been no new PSU bank merger. The next merger among PSU banks involves the fate of the unmerged ones. However, when the next big PSU bank merger will happen is yet to be known.

In June it was known that the government will likely draw up a mega PSB merger plan to trim the number of state-owned banks number to 4 in the financial year 2026-27. Hence, new updates will be keenly watched.