In March 2017 India had 27 public sector banks. Since 1 April 2020 it has had 12. In between, six banks were folded into SBI, two into Bank of Baroda and ten into four, the largest consolidation in Indian banking since nationalisation. In the private sector the biggest deal of all, the merger of HDFC Ltd into HDFC Bank on 1 July 2023, created a lender second only to SBI. Mergers have also been the RBI's main tool for rescuing failing banks, from Global Trust Bank in 2004 to Lakshmi Vilas Bank in 2020. This part explains why India merges banks, how each wave was done, which laws govern it, what the mergers achieved, and why a second round of PSB consolidation keeps coming up in 2025–26.
Bank types and ownership are covered in Part 21 and Part 22. The rescues of Yes Bank and Lakshmi Vilas Bank are told in full in Part 15 and, from the failure side, in Part 29; the BR Act's other sections are in Part 18. RRB amalgamation is in Part 34.
In the news
- 14 Oct 2026: IDBI Bank sale approved by the Cabinet. The CCEA cleared the sale of a 60.72% stake in IDBI Bank to an entity of Canada's Fairfax Financial Holdings; the RBI's fit-and-proper approval is still pending. Why it matters for the exam: IDBI Bank was one of the 27 PSBs of 2017 and left the list when it was recategorised as a private bank in January 2019, which is part of how the count fell to 12.
- 17 Aug 2026: Banking committee "later this month". At the PSB Confluence in New Delhi, Finance Minister Nirmala Sitharaman said a high-powered committee on banking for Viksit Bharat would be set up later in the month to review the sector's needs. Why it matters for the exam: any second round of PSB mergers is now expected to come through this committee's recommendations rather than a direct announcement.
- 2 Jul 2026: Consolidation in the panel's remit. Business Today reported that the committee's draft terms of reference cover consolidation, governance, digital transformation, inclusion and global competitiveness. Why it matters for the exam: this is a report, not a notification.
- 23 Mar 2026: "No merger proposal" again. MoS Finance Pankaj Chaudhary told the Lok Sabha no PSB merger proposal was under consideration, and cited the growth of merged banks: Bank of Baroda's business rose from ₹16.1 lakh crore (March 2019) to ₹27 lakh crore (March 2025), and PNB's from ₹18.3 lakh crore (March 2020) to ₹26.8 lakh crore (March 2025). Why it matters for the exam: these are the government's own outcome numbers for the 2019 and 2020 mergers.
- 23 Feb 2026: "There isn't one". Asked about a roadmap for PSB mergers after her post-Budget address to the RBI Board, the Finance Minister said she was "not familiar with any roadmap...there isn't one", and that the new banking committee would examine every aspect of strengthening Indian banking. Why it matters for the exam: the official position in 2026 is "no roadmap yet, a committee first".
- 1 Feb 2026: Budget proposes a High Level Committee on Banking for Viksit Bharat. The Union Budget 2026-27 announced a committee to review the banking sector comprehensively while safeguarding financial stability, inclusion and consumer protection. Why it matters for the exam: expect a question on the committee's name and the Budget that announced it.
- 1 Dec 2025: Lok Sabha reply on consolidation. In reply to Unstarred Question No. 52, MoS Pankaj Chaudhary said: "Presently, no proposal on merger or consolidation of Public Sector Banks (PSBs) is under consideration of the Government." This came after media reports of a plan to cut the 12 PSBs to about four. Why it matters for the exam: reports of a "Merger 2.0" are speculation; the official line has not changed.
- 28 Nov 2025: Voluntary Amalgamation Directions, 2025. As part of its 244 consolidated Master Directions, the RBI issued the Commercial Banks – Voluntary Amalgamation Directions, 2025, under Sections 44A and 35A of the BR Act, covering bank–bank and NBFC–bank amalgamations. Why it matters for the exam: this is now the single rulebook for private bank mergers such as HDFC–HDFC Bank and IDFC–IDFC First.
Why consolidate at all?
The Narasimham blueprint
The intellectual case goes back to the two Narasimham Committees. The first (1991) proposed a tiered banking structure: three or four large banks, including SBI, with an international presence; eight to ten national banks offering universal banking across the country; local banks confined to a region; and rural banks (RRBs) focused on agriculture. The second committee (1998) repeated the idea and added a warning: mergers should be between strong banks, and "large banks should merge only with banks of equivalent size and not with weaker banks". Weak banks that could not revive themselves were to be restructured or closed, not dumped into strong ones.
India took two decades to act on this. The arguments that carried the day in 2017–2020 were:
- Scale. A bank's single-borrower limit is a share of its capital, so bigger banks can fund bigger projects.
- Global reach. Even today SBI is the only Indian bank in the world's top 50 by assets (43rd; HDFC Bank is 73rd, per a December 2025 PTI report).
- Capital efficiency. Fewer, larger banks are easier for the government to recapitalise and for the RBI to supervise.
- Cost and technology. Overlapping branches, treasuries and head offices can be rationalised, and one large bank can afford better systems and specialists than three small ones.
The case against
Critics raise three points:
- Weak plus weak is still weak. Merging does not remove bad loans; it only pools them.
- Too big to fail. Bigger banks concentrate risk, which is why the RBI imposes extra capital on D-SIBs (see Part 15).
- Integration cost. Different software, cultures and pay structures take years to merge, and lending can slow meanwhile.
Public sector bank consolidation
Before 2017
Mergers among state-owned banks were rare. New Bank of India, nationalised in 1980, was absorbed by Punjab National Bank in 1993. SBI took over two of its associates separately: State Bank of Saurashtra in 2008 and State Bank of Indore in 2010. Other PSB "mergers" before 2017 were rescues of failing private banks, such as Global Trust Bank into Oriental Bank of Commerce on 14 August 2004.
Round 1: SBI and its associates (1 April 2017)
On 1 April 2017 SBI absorbed its five remaining associate banks and the young Bharatiya Mahila Bank:
- State Bank of Bikaner and Jaipur
- State Bank of Hyderabad
- State Bank of Mysore
- State Bank of Patiala
- State Bank of Travancore
- Bharatiya Mahila Bank, a women-focused bank set up on 19 November 2013 and inaugurated by then Prime Minister Manmohan Singh
The Cabinet first approved the five associates; Bharatiya Mahila Bank was added later. The merged SBI reported a deposit base of over ₹26 lakh crore, advances of about ₹18.5 lakh crore and around 24,000 branches. It pushed SBI into the world's top 50 banks by assets. With six banks gone, the PSB count fell from 27 to 21.
IDBI Bank leaves the list (21 January 2019)
After LIC bought a 51% stake, the RBI recategorised IDBI Bank as a private sector bank for regulatory purposes with effect from 21 January 2019 (press release of 14 March 2019). The count fell to 20. Its strategic sale to Fairfax, approved by the CCEA on 14 October 2026, is a disinvestment, not a merger.
Round 2: Bank of Baroda, Vijaya and Dena (1 April 2019)
On 17 September 2018 the government proposed a three-way bank merger: Vijaya Bank and Dena Bank into Bank of Baroda. The Cabinet and the banks' boards approved it on 2 January 2019, and it took effect on 1 April 2019. Bank of Baroda, the stronger bank, was the transferee (anchor) and kept its name; Vijaya and Dena were the transferor banks. Swap ratios:
- 402 Bank of Baroda shares for every 1,000 Vijaya Bank shares;
- 110 Bank of Baroda shares for every 1,000 Dena Bank shares.
The count fell from 20 to 18.
Round 3: the 2020 mega-merger (1 April 2020)
On 30 August 2019 the Finance Minister announced that ten PSBs would be merged into four. The Cabinet approved the schemes on 4 March 2020, and all four took effect on 1 April 2020, in the first days of the Covid-19 lockdown. The same announcement promised capital of ₹55,250 crore for the banks.
| Anchor (transferee) | Merged into it | Business after merger | Rank among PSBs | Swap ratio (anchor shares per 1,000) |
|---|---|---|---|---|
| Punjab National Bank | Oriental Bank of Commerce, United Bank of India | ₹17.94 lakh crore | 2nd | OBC 1,150; United 121 |
| Canara Bank | Syndicate Bank | ₹15.20 lakh crore | 4th | Syndicate 158 |
| Union Bank of India | Andhra Bank, Corporation Bank | ₹14.59 lakh crore | 5th | Andhra 325 |
| Indian Bank | Allahabad Bank | ₹8.08 lakh crore | 7th | Not stated here |
The business figures are the combined deposits plus advances shown in the Finance Ministry's presentation of 30 August 2019, based on March 2019 data. Branch networks after merger: PNB 11,437 (second largest), Canara 10,342, Union 9,609.
The government also sorted the PSBs left standing into two groups:
- National banks kept independent: Bank of India and Central Bank of India.
- Regional banks kept independent: Indian Overseas Bank, UCO Bank, Bank of Maharashtra and Punjab & Sind Bank.
So since 1 April 2020 the 12 PSBs are: SBI, PNB, Bank of Baroda, Canara Bank, Union Bank of India, Bank of India, Indian Bank, Central Bank of India, Indian Overseas Bank, UCO Bank, Bank of Maharashtra and Punjab & Sind Bank.
How PSB mergers are done legally
Nationalised banks are not companies, so they are not merged under the Companies Act or Section 44A of the BR Act. The Central Government, after consulting the RBI, frames an amalgamation scheme under the bank nationalisation Acts of 1970 and 1980, the Cabinet approves it, and it is notified in the Gazette. In practice the steps were: announcement by the Finance Minister; in-principle approval by each bank's board; swap ratios fixed by the boards on independent valuation; Cabinet approval of the scheme; notification; and an effective date (usually 1 April, the start of a financial year). Employees of transferor banks become employees of the anchor on the same terms, and depositors simply become customers of the anchor.
Private sector mergers
HDFC Ltd into HDFC Bank (1 July 2023)
On 4 April 2022 the boards of HDFC Ltd, India's largest housing finance company, and HDFC Bank approved a composite scheme to merge HDFC into the bank. The merger took effect on 1 July 2023, after regulatory, NCLT and shareholder approvals. Key facts:
- Swap ratio: 42 HDFC Bank shares (face value ₹1) for every 25 HDFC shares (face value ₹2). HDFC's own stake in HDFC Bank was cancelled.
- Ownership: HDFC Bank became 100% owned by public shareholders, with former HDFC shareholders owning 41%. It has no promoter.
- Size: at 31 December 2021, HDFC Bank's advances were about ₹12.61 lakh crore and HDFC's ₹5.26 lakh crore, giving pro forma combined advances of ₹17,86,669 crore. The deal was valued at about US$40 billion, the largest in Indian corporate history.
- After the merger: about 12 crore customers, 1.77 lakh employees and 8,300 branches, and India's second-largest bank by assets after SBI.
The deal was unusual because an NBFC (housing finance company) became part of a bank. HDFC's loans had been funded by bonds and had no CRR, SLR or priority-sector obligations; once inside the bank, they attracted all three, and the bank had to fund a much larger loan book with deposits. In December 2023 the RBI moved HDFC Bank from bucket 1 to bucket 2 of the D-SIB list, raising its extra CET1 requirement to 0.40% from 1 April 2025.
IDFC into IDFC First Bank (1 October 2024)
IDFC Ltd was the holding company of IDFC First Bank. In a reverse merger, the parent was merged into its bank subsidiary: first IDFC Financial Holding Company into IDFC Ltd, then IDFC Ltd into IDFC First Bank, effective 1 October 2024. The RBI approved the scheme in December 2023, shareholders approved it on 17 May 2024 (99.95% in favour), and the NCLT's Chennai bench sanctioned it on 25 September 2024. IDFC shareholders received 155 IDFC First Bank shares for every 100 IDFC shares. The point was to remove the holding-company layer and the cost of listing two entities.
Earlier private mergers
Centurion Bank of Punjab merged into HDFC Bank in 2008 in a share swap worth about ₹9,510 crore, then the largest acquisition in Indian finance. These were voluntary, market-led mergers under Section 44A of the BR Act.
Foreign capital without a merger
Not every consolidation is a merger. Japan's SMBC bought 20% of Yes Bank in September 2025 (13.18% from SBI for ₹8,889 crore), and Emirates NBD agreed on 18 October 2025 to buy 60% of RBL Bank for about ₹26,850 crore, a deal reported completed in June 2026.
Rescue mergers: when the RBI forces the pace
A failing bank cannot be resolved under the IBC (which does not apply to banks). The RBI's main tool is Section 45 of the Banking Regulation Act:
- The RBI applies to the Central Government for a moratorium on the bank; during it, withdrawals are capped and no one can sue the bank.
- The RBI prepares a scheme of reconstruction or amalgamation, publishes a draft for comments from the bank, the transferee and others, and finalises it.
- The Central Government sanctions the scheme, which then binds everyone, including shareholders and creditors who object.
Examples:
- Global Trust Bank → Oriental Bank of Commerce (14 August 2004): after a moratorium; OBC gained 103 branches.
- Yes Bank (March 2020): a reconstruction, not a merger: SBI and other banks put in capital under a scheme approved on 13 March 2020 (see Part 15).
- Lakshmi Vilas Bank → DBS Bank India (27 November 2020): the moratorium began on 17 November 2020; the Government sanctioned the amalgamation scheme on 25 November; LVB's branches opened as DBS Bank India branches on 27 November 2020. Shareholders were wiped out; depositors were fully protected. The rescuer was the Indian subsidiary of Singapore's DBS.
- PMC Bank → Unity Small Finance Bank (25 January 2022): a large urban co-operative bank taken over by a newly licensed small finance bank.
The pattern is a "shotgun marriage": quick, depositor-friendly, and often at the expense of shareholders and some bondholders.
The law in one place
| Route | Law | Who decides | Used for |
|---|---|---|---|
| Voluntary merger of private banks | Section 44A, BR Act, with the Voluntary Amalgamation Directions, 2025 | Boards (two-thirds), shareholders (majority in number holding two-thirds in value), then RBI sanction | HDFC–HDFC Bank, IDFC–IDFC First, CBoP–HDFC Bank |
| NBFC into a bank, or bank into an NBFC | Companies Act Sections 230–234 (NCLT), with an RBI no-objection first | NCLT, after RBI NOC | HDFC Ltd into HDFC Bank |
| Compulsory merger or reconstruction of a weak bank | Section 45, BR Act | RBI prepares scheme; Central Government sanctions | GTB, LVB, Yes Bank, PMC |
| Merger of nationalised banks | Bank nationalisation Acts, 1970 and 1980 | Central Government scheme, after consulting the RBI | 2019 and 2020 PSB mergers |
| RRB amalgamation | RRB Act, 1976 | Central Government notification, after consulting NABARD, the state and sponsor banks | 43 → 28 RRBs on 1 May 2025 |
What the 2025 Voluntary Amalgamation Directions require
The RBI (Commercial Banks – Voluntary Amalgamation) Directions, 2025 (28 November 2025) apply to commercial banks other than small finance banks, payments banks, local area banks and foreign banks. They cover a bank merging with a bank; a bank with an SFB, LAB or payments bank; and an NBFC with a bank or the reverse. The main rules:
- the scheme must be approved by two-thirds of the total board of each entity, after considering due diligence, the swap ratio, and the effect on profitability and capital adequacy;
- the swap ratio must be set by independent valuers;
- shareholders must pass a resolution by a majority in number representing two-thirds in value of those voting, after notice published once a week for three weeks in at least two newspapers, one in the local language;
- dissenting shareholders can claim the value of their shares, as determined by the RBI, within three months of the RBI's sanction (Section 44A(3)); the RBI's valuation is final;
- an NBFC–bank scheme also needs NCLT approval, and the RBI's no-objection must come before the NCLT is approached;
- documents are filed through the RBI's PRAVAAH portal.
RRB amalgamation
Regional rural banks have gone through four rounds of amalgamation, and the fourth, on the "One State, One RRB" principle, took effect on 1 May 2025, cutting their number from 43 to 28. The RRBs are owned by the Centre (50%), the sponsor bank (35%) and the state (15%). Details are in Part 34.
Did the mergers work?
Scale: yes
Each 2020 anchor roughly doubled. The government's own figures show the merged banks growing: Bank of Baroda's business rose from ₹16.1 lakh crore (March 2019) to ₹27 lakh crore (March 2025), and PNB's from ₹18.3 lakh crore (March 2020) to ₹26.8 lakh crore (March 2025). SBI remains India's only top-50 global bank.
Asset quality and profits: much better, but not only because of mergers
Gross NPAs of all scheduled commercial banks fell from a peak of 11.6% in March 2018 to 1.8% in March 2026 (FSR June 2026). The 12 PSBs reported a record net profit of ₹1.78 lakh crore in 2024-25, up 26% from ₹1.41 lakh crore in 2023-24, and ₹93,675 crore in the first half of 2025-26. But much of the turnaround came from recapitalisation, the Asset Quality Review, the IBC, recoveries and a benign credit cycle (see Part 25 and Part 26). Mergers made the clean-up simpler to manage, but they did not, by themselves, create it.
Weak with weak?
The Ministry's own 2019 data show that some anchors were not strong. PNB's CET1 ratio was 6.21% and CRAR 9.73%, with a net NPA ratio of 6.55%; the merged PNB had a CET1 ratio of only about 7.46%. Canara's CRAR was 11.90%. This was close to the "strong with weak" pattern the Narasimham Committee warned against, and the banks needed fresh government capital.
Technology and culture: the hard part
Mergers were easier where banks shared a core banking platform: PNB, OBC and United Bank all ran Finacle, and so did Union, Andhra and Corporation. Even so, merged banks had to harmonise HR policies, pay and seniority across staff from different banks, and customers of the merged banks had to move to new IFSC codes, cheque books and apps. Integration of systems and cultures is the slowest part of any merger.
Worked examples
Example 1: share swap in the HDFC merger
An investor held 100 HDFC shares. The ratio was 42 HDFC Bank shares for every 25 HDFC shares.
- New shares = 100 × 42 ÷ 25 = 168 HDFC Bank shares.
On 4 April 2022, the day of the announcement, HDFC closed at about ₹2,748.45 and HDFC Bank at about ₹1,642.80 on the BSE. Was the swap fairly priced by the market?
- Value of 25 HDFC shares = 25 × 2,748.45 = ₹68,711.25
- Value of 42 HDFC Bank shares = 42 × 1,642.80 = ₹68,997.60
- Gap = ₹286.35, or 286.35 ÷ 68,711.25 ≈ 0.42%
HDFC traded at a discount of under half a percent to its swap value: the market expected the deal to go through, with a small discount for the 15 months of approvals ahead.
Example 2: swap ratios in the PSB mergers
A depositor-investor held 2,500 Vijaya Bank shares and 1,000 Oriental Bank of Commerce shares.
- Vijaya → Bank of Baroda at 402 per 1,000: 2,500 × 402 ÷ 1,000 = 1,005 BoB shares.
- OBC → PNB at 1,150 per 1,000: 1,000 × 1,150 ÷ 1,000 = 1,150 PNB shares.
Example 3: who brought what to the new PNB?
Business at March 2019: PNB ₹11.82, OBC ₹4.04 and United Bank ₹2.08 lakh crore; total ₹17.94 lakh crore.
- PNB's share = 11.82 ÷ 17.94 ≈ 65.9%
- OBC's share = 4.04 ÷ 17.94 ≈ 22.5%
- United Bank's share = 2.08 ÷ 17.94 ≈ 11.6%
Example 4: "two to four and a half times"
The Ministry said Union Bank's merger would make the business of each bank "2 to 4.5 times" larger. Check it with the March 2019 figures: Union ₹7.41 lakh crore, Andhra ₹3.99 lakh crore, Corporation ₹3.20 lakh crore; merged ₹14.59 lakh crore.
- For Union: 14.59 ÷ 7.41 ≈ 1.97 times
- For Andhra: 14.59 ÷ 3.99 ≈ 3.66 times
- For Corporation: 14.59 ÷ 3.20 ≈ 4.56 times
Example 5: growth after the merger
Bank of Baroda's business rose from ₹16.1 lakh crore (March 2019) to ₹27 lakh crore (March 2025), over six years.
- Total growth = 27 ÷ 16.1 − 1 ≈ 67.7%
- Compound annual growth = (27 ÷ 16.1)^(1/6) − 1 ≈ 1.677^(0.167) − 1 ≈ 9.0% a year
For PNB, ₹18.3 lakh crore to ₹26.8 lakh crore over five years: (26.8 ÷ 18.3)^(1/5) − 1 ≈ 7.9% a year.
Is a second round coming?
Talk of a "Merger 2.0" grew after the Finance Minister told the 12th SBI Banking and Economics Conclave on 6 November 2025 that India needed many big, world-class banks and that "work has already commenced. We are discussing with the RBI. We are discussing with banks". Media reports spoke of cutting the 12 PSBs to about four, naming the smaller ones (Bank of India, Central Bank of India, IOB, UCO Bank, Bank of Maharashtra) as candidates. Parliament was told twice (1 December 2025 and 23 March 2026) that no proposal was under consideration. The question now sits with the High Level Committee on Banking for Viksit Bharat, whose members and terms had not been notified as of the latest reports. Treat named merger pairs as speculation until the Cabinet decides.
Common exam traps
- 27 → 12 is not all mergers. IDBI Bank's recategorisation as a private bank (January 2019) also took one bank off the list.
- The anchor keeps its name. After 2020 there is no "Oriental Bank" or "Syndicate Bank"; their branches are PNB and Canara branches.
- Allahabad Bank went to Indian Bank, not Indian Overseas Bank. Andhra and Corporation went to Union Bank, not Canara.
- Vijaya and Dena went to Bank of Baroda in 2019, a year before the mega-merger.
- Bharatiya Mahila Bank was merged into SBI on the same date as the five associates, 1 April 2017. State Bank of Saurashtra (2008) and State Bank of Indore (2010) went earlier.
- HDFC merger dates: announced 4 April 2022, effective 1 July 2023. HDFC Ltd was a housing finance company, not a bank.
- Section 44A vs Section 45. 44A is voluntary and needs RBI sanction; 45 is compulsory, with the RBI preparing the scheme and the Central Government sanctioning it.
- Yes Bank was reconstructed, not merged. LVB was merged with DBS Bank India; PMC Bank with Unity SFB.
- The IBC does not apply to banks.
Key facts at a glance
| Narasimham Committee I (1991) | 3–4 large international banks, 8–10 national banks, local banks, rural banks |
| Narasimham Committee II (1998) | Merge strong banks of similar size; do not merge weak banks into strong |
| PNB–New Bank of India | 1993: PNB absorbed the nationalised New Bank of India |
| SBI associates + BMB | 1 April 2017: SBBJ, SBH, SBM, SBP, SBT and Bharatiya Mahila Bank |
| IDBI Bank | Recategorised as private from 21 January 2019 |
| BoB + Vijaya + Dena | Announced 17 Sep 2018; effective 1 April 2019; a three-way merger |
| 2020 mega-merger | Announced 30 Aug 2019; Cabinet 4 Mar 2020; effective 1 April 2020; 10 into 4 |
| PNB | + OBC + United Bank; ₹17.94 lakh crore; 11,437 branches |
| Canara Bank | + Syndicate Bank; ₹15.20 lakh crore |
| Union Bank of India | + Andhra Bank + Corporation Bank; ₹14.59 lakh crore |
| Indian Bank | + Allahabad Bank; ₹8.08 lakh crore |
| Number of PSBs | 27 (2017) → 12 (since 1 April 2020) |
| HDFC–HDFC Bank | Announced 4 Apr 2022; effective 1 July 2023; 42 for 25; HDFC holders 41% |
| IDFC–IDFC First Bank | Effective 1 October 2024; 155 for 100 |
| LVB–DBS Bank India | 27 November 2020, under Section 45 |
| RRBs | 43 → 28 from 1 May 2025 (One State, One RRB) |
| Voluntary Amalgamation Directions | 28 November 2025; Sections 44A and 35A |
| Banking for Viksit Bharat committee | Announced in Budget 2026-27 (1 Feb 2026) |
Exam corner: what to remember
- 27 → 21 → 20 → 18 → 12: SBI (2017), IDBI recategorised (2019), BoB (2019), mega-merger (2020).
- Anchors and partners: PNB (OBC, United); Canara (Syndicate); Union (Andhra, Corporation); Indian (Allahabad); BoB (Vijaya, Dena).
- Independent PSBs: national (Bank of India, Central Bank of India) and regional (IOB, UCO, Bank of Maharashtra, Punjab & Sind).
- HDFC Bank: 1 July 2023; 42:25; 41%; no promoter; D-SIB bucket 2.
- Legal routes: Section 44A (voluntary, RBI sanctions), Section 45 (compulsory, Centre sanctions), nationalisation Acts (PSBs), RRB Act (RRBs).
- Rescue mergers: GTB → OBC (2004), LVB → DBS (2020), PMC → Unity SFB (2022); Yes Bank reconstructed (2020).
- 2025–26: no official merger proposal (Lok Sabha, 1 Dec 2025 and 23 Mar 2026); High Level Committee on Banking for Viksit Bharat announced in Budget 2026-27.
Test yourself
With effect from 1 April 2020, Syndicate Bank was amalgamated with:
Show answer
Answer: (b) Syndicate Bank went to Canara Bank; Andhra and Corporation went to Union Bank, Allahabad to Indian Bank, and OBC and United to PNB.
Which bank was merged into SBI on 1 April 2017 along with five associate banks?
Show answer
Answer: (c) Bharatiya Mahila Bank merged along with SBBJ, SBH, SBM, SBP and SBT; Saurashtra (2008) and Indore (2010) had merged earlier.
Under the scheme for the merger of HDFC Ltd into HDFC Bank, HDFC shareholders received:
Show answer
Answer: (b) The ratio was 42 for 25; 155 for 100 was the IDFC–IDFC First Bank ratio.
A shareholder holds 300 HDFC shares at the time of the merger. How many HDFC Bank shares does she receive?
Show answer
Answer: (c) 300 × 42 ÷ 25 = 504 shares.
Under which section of the Banking Regulation Act can the RBI prepare a scheme for the compulsory amalgamation of a bank under moratorium, as it did for Lakshmi Vilas Bank?
Show answer
Answer: (c) Section 45 covers moratorium and reconstruction or amalgamation schemes sanctioned by the Central Government; 44A is for voluntary mergers.
In 2020, the business of the merged Union Bank of India was ₹14.59 lakh crore and Corporation Bank's business before merger was ₹3.20 lakh crore. The merged business was about how many times Corporation Bank's?
Show answer
Answer: (c) 14.59 ÷ 3.20 ≈ 4.56, which the Ministry described as "up to 4.5 times".
The Budget for 2026-27 proposed a committee to comprehensively review the banking sector. It is called:
Show answer
Answer: (b) The High Level Committee on Banking for Viksit Bharat was announced on 1 February 2026.
In his Lok Sabha reply of 1 December 2025, the Minister of State for Finance said about PSB consolidation that:
Show answer
Answer: (b) "Presently, no proposal on merger or consolidation of Public Sector Banks (PSBs) is under consideration of the Government."
Which of the following was NOT one of the reasons the number of PSBs fell from 27 in 2017 to 12 in 2020?
Show answer
Answer: (d) Bank of Maharashtra is still one of the 12 PSBs; the other three all reduced the count.
Which Committee recommended that "large banks should merge only with banks of equivalent size and not with weaker banks"?
Show answer
Answer: (a) The second Narasimham Committee (1998) favoured mergers of strong banks and warned against using mergers to bail out weak ones.
Further reading
- RBI, Commercial Banks – Voluntary Amalgamation Directions, 2025: the current rulebook for private bank and NBFC–bank mergers, with the board, valuation and shareholder steps.
- RBI press release on Lakshmi Vilas Bank's moratorium, 17 November 2020 and the amalgamation with DBS Bank India, 25 November 2020: a Section 45 rescue merger, step by step.
- RBI, Re-categorisation of IDBI Bank as a private sector bank, 14 March 2019: the short release that explains one step in the 27-to-12 count.
- Outlook Business (PTI), "PSB consolidation to gain momentum in 2026", 26 December 2025: a useful round-up of the merger history, global rankings and PSB profits.
- Simran Mishra, "An Analysis behind the Merger of Banks", IJNRD, May 2022: reproduces the Finance Ministry's 2019 bank-by-bank tables on business, CASA, capital and NPAs for the four mega-mergers.
- RBI, Report on Trend and Progress of Banking in India: the annual report that tracks bank-group performance before and after consolidation.
- Business Today, 2 July 2026: what the Banking for Viksit Bharat committee is expected to examine, including consolidation.
Sources
- Wikipedia, Narasimham Committee: 1998 committee's three-tier structure and "large banks should merge only with banks of equivalent size" (accessed 24 October 2026)
- GKToday, First Narasimham Committee: 1991 tiers of 3–4 international banks, 8–10 national banks, local banks and rural banks (accessed 24 October 2026)
- Wikipedia, Bharatiya Mahila Bank: founded 19 November 2013, inaugurated by Manmohan Singh, merged 1 April 2017; five associates; Saurashtra 2008, Indore 2010 (accessed 24 October 2026)
- Business Standard (ANI), 1 April 2017: merged SBI from 1 April 2017; deposits over ₹26 lakh crore, advances ₹18.5 lakh crore, around 24,000 branches (accessed 24 October 2026)
- RBI press release, 14 March 2019: IDBI Bank recategorised as a private sector bank from 21 January 2019 after LIC's 51% stake (accessed 24 October 2026)
- Wikipedia, Dena Bank: proposal of 17 September 2018, Cabinet approval 2 January 2019, effective 1 April 2019, 110 per 1,000 (accessed 24 October 2026)
- Bank of Baroda, news coverage, 3 January 2019: swap ratios of 402 and 110 per 1,000; BoB transferee (accessed 24 October 2026)
- Onmanorama, 30 August 2019: ten PSBs into four; business sizes and ranks; 27 to 12 (accessed 24 October 2026)
- Governance Now, 2019: business of ₹17.95, ₹15.20, ₹14.59 and ₹8.08 lakh crore; branches 11,437, 10,342 and 9,609 (accessed 24 October 2026)
- Business Standard, 30 August 2019: PNB merged business of ₹17.94 lakh crore, 11,437 branches (accessed 24 October 2026)
- Simran Mishra, IJNRD, May 2022: Finance Ministry tables (via Economic Times) with each bank's business, CET1, CRAR and net NPA; ₹55,250 crore capital; independent national and regional PSBs (accessed 24 October 2026)
- Wikipedia, Oriental Bank of Commerce, United Bank of India, Syndicate Bank, Andhra Bank and Allahabad Bank: Cabinet approval of 4 March 2020; effective 1 April 2020; swap ratios of 1,150, 121, 158 and 325 per 1,000; GTB merger of 14 August 2004 (accessed 24 October 2026)
- Business Standard, 4 April 2022: 42 for 25; 100% public ownership; 41%; advances at 31 December 2021; pro forma ₹17,86,669 crore; share prices on the day (accessed 24 October 2026)
- Outlook Business, 2023: merger effective 1 July 2023; US$40 billion deal (accessed 24 October 2026)
- Business Today, 2 July 2023: record date of 13 July 2023 for allotment of HDFC Bank shares; HDFC Ltd delisting (accessed 24 October 2026)
- Wikipedia, HDFC Bank: customers, employees and branches after the merger; Centurion Bank of Punjab deal of 2008 (accessed 24 October 2026)
- Businessworld, 2024: IDFC–IDFC First Bank effective 1 October 2024; NCLT sanction 25 September 2024 (accessed 24 October 2026)
- LiveLaw, May 2024: shareholder approval of 17 May 2024 (accessed 24 October 2026)
- Angel One, IDFC merger ratio: 155 for 100 (accessed 24 October 2026)
- Business Standard, 17 September 2025: SBI's sale of 13.18% of Yes Bank to SMBC for ₹8,889 crore; RBI approval 22 August 2025 (accessed 24 October 2026)
- Wikipedia, RBL Bank: Emirates NBD's 60% stake announced 18 October 2025; SEBI approval April 2026; completed June 2026 (accessed 24 October 2026)
- RBI press release, 17 November 2020 and 25 November 2020: LVB moratorium under Section 45; scheme sanctioned; branches to operate as DBS Bank India from 27 November 2020 (accessed 24 October 2026)
- RBI, Commercial Banks – Voluntary Amalgamation Directions, 2025: 28 November 2025; Sections 44A and 35A; applicability; board, valuation, shareholder and dissent rules; PRAVAAH (accessed 24 October 2026)
- Wikipedia, Regional rural bank: One State, One RRB; 43 to 28 RRBs from 1 May 2025 (accessed 24 October 2026)
- Angel One (PTI), 24 March 2026: Lok Sabha reply of 23 March 2026; BoB and PNB business growth (accessed 24 October 2026)
- StaffNews, copy of Lok Sabha Unstarred Question No. 52, 1 December 2025: "no proposal on merger or consolidation" (accessed 24 October 2026)
- Outlook Business, 6 November 2025: FM's remarks at the 12th SBI Banking and Economics Conclave (accessed 24 October 2026)
- Outlook Business (PTI), 26 December 2025: SBI 43rd and HDFC Bank 73rd globally; PSB profits of ₹1.78 lakh crore (FY25) and ₹93,675 crore (H1 FY26) (accessed 24 October 2026)
- News On AIR, 1 February 2026: Budget announcement of the High Level Committee on Banking for Viksit Bharat (accessed 24 October 2026)
- Business Today, 23 February 2026: "not familiar with any roadmap...there isn't one" (accessed 24 October 2026)
- Business Today, 2 July 2026: terms of reference, consolidation, M. Nagaraju, FDI cap idea (accessed 24 October 2026)
- Daily Excelsior, 18 August 2026: FM's remarks at the PSB Confluence on 17 August 2026 (accessed 24 October 2026)
- Pareto Academy, Part 18 and Part 15: IDBI Bank sale approved on 14 October 2026; GNPA 11.6% (2018) and 1.8% (2026); D-SIB buckets; Yes Bank and PMC Bank details (accessed 24 October 2026)