Mega Merger of State-Run Banks

Mega Merger of State-Run Banks, From 01^st April 2020

Ten Public Sector Undertaking (PSU) banks will be amalgamated into four banks from tomorrow, 1 April. In the biggest consolidation exercise in the banking space, the government in August 2019 had announced the merger of 10 public sector lenders into four bigger and stronger banks. With this, the number of public sector banks in India will come down to 12 from 27 in 2017. It was widely speculated that the government may defer the consolidation exercise for some time due to the novel coronavirus pandemic that has impacted our economy.

Here is all you need to know about the mega merger of PSU banks that will come into force from 1 April:

1) Oriental Bank of Commerce (OBC) and United Bank of India will be merged into Punjab National Bank (PNB). After the merger, these together will form the second-largest public sector bank in the country, after State Bank of India (SBI).

2) Syndicate Bank will be merged into Canara Bank, which will make it the fourth-largest public sector lender.

3) Indian Bank will be merged with Allahabad Bank.

4) Union Bank of India will be merged with Andhra Bank and Corporation Bank

5) Customers, including depositors of merging banks will be treated as customers of the banks in which these banks have been merged with effect from 1 April 2020.

6) After the merger, there will be 12 PSUs - six merged banks and six independent public sector banks.

-Six merged banks - SBI, Bank of Baroda, Punjab National Bank, Canara Bank, Union Bank of India, Indian Bank

-Six independent banks - Indian Overseas Bank, Uco Bank, Bank of Maharashtra, Punjab and Sind Bank, Bank of India, Central Bank of India.

7) The Oriental Bank of Commerce and United Bank of India will operate as the branches of the Punjab National Bank from tomorrow (1 April 2020).

8) Syndicate Bank will function as the branch of Canara Bank effective 1 April 2020.

9) Similarly, all Allahabad Bank branches will be treated as branches of the Indian Bank

10) All branches of Andhra Bank and Corporation Bank will function as Union Bank of India branches with effect from 1 April, 2020.

Earlier this month the cabinet gave its approval for the mergers that will consolidate operations of 10 public sector banks (PSBs) into four 'mega banks'.

IMPACT ON CUSTOMERS

Now, bank customers including account holders of amalgamating banks are likely to get affected. Here is a look at how bank customers will be impacted.

Bank account number, customer IDs to change :-

-According to the FAQs on the amalgamation of UBI and OBC with PNB, "The existing Account No., IFSC, MICR, Debit Card etc. will continue post amalgamation, until further notification. Your existing account in all three amalgamating banks will continue with all its services.

On a later date, you are likely to get a new account number and customer ID. For instance, a couple of years ago, when five associate banks of State Bank of India (SBI) were merged, IFSC codes and names of 1,300 branches were changed. The banking behemoth changed the names and IFSC codes of branches of the amalgamating banks located in major cities such as Mumbai, New Delhi, Bengaluru, Chennai, Hyderabad, Kolkata and Lucknow.

Account details for auto-credits/debits :-

You would have given your bank account numbers and IFSC codes for various financial transactions - auto credit of dividends via ECS, auto-credit of salary, auto debit of various bills/charges etc. Unless these accounts are seamlessly merged into the financial system of the anchor bank, you would be required to change the details of your bank account given for these purposes.

According to the FAQs of the OBC, UBI and PNB merger, "All ECS/NACH arrangements/standing instructions for utility payments, Loan EMIs, RD Instalments, Credit Card payments and other services shall function without any disruption to the customer. There is no need to resubmit your mandate."

Local branches and ATMs :-

Customers will now have access to a larger number of branches and ATM network and next generation banking technology. However, do keep in mind that branch rationalisation will happen. For instance, your existing home branch could shut shop if the new acquiring entity has its own branch in the same vicinity.

According to the above mentioned FAQs, "There shall be no immediate branch closures in any of the Banks. In future, if there are some closely located branches of the three Banks, they may be merged/shifted with prior notice to our esteemed customers." Keep an eye on the new IFSC and MICR code applicable to your branch and account since you will have to quote it for funds transfer and other financial transactions.

Fixed deposit and recurring deposit rates :-

The current rate of interest for existing RD/FD will continue till maturity. For FD, renewal will be done with the latest term deposit rates of the amalgamated bank.

Credit and debit cards :-

Your existing credit card will be valid until the date of expiry printed on the credit card and then it will be renewed on its expiry. You can also approach amalgamating bank for a fresh credit card.

With regards to debit cards, customers will not be charged a fee. For instance, the customers Allahabad Bank and Indian Bank can use their debit cards in the ATMs of both banks without any charges.

 (Source- Economic Times)