Announcing that the Narendra Modi government has no plans to merge more public sector banks, Union Finance Minister Nirmala Sitharaman on Monday informed that there hasn't been any proposal in this regard. During her Budget 2021 Presentation, she had announced that two banks will be privatized.
On 1 February 2021, the minister had announced the privatization of two banks and a government insurance company. The government has also set a target of Rs 1.75 lakh crore for disinvestment and privatization for the current financial year i.e. 2021-22.
Notably, the NITI Aayog has been given the task of selection for privatization. As per a Zee News report, the Indian Overseas Bank and the Central Bank of India have been selected for privatization. However, it has not been officially announced yet.
To improve the condition of public sector banks, the Modi government adopted the process of merger in two different phases. In 2019, 10 public sector banks were merged. A total of six weak banks were merged into four big banks. Oriental Bank of Commerce and United Bank of India were merged with Punjab National Bank. Then Allahabad Bank was merged with Indian Bank. Syndicate Bank was merged with Canara Bank. Andhra Bank and Corporation Bank were merged with Union Bank of India.
In the first phase, five associate banks were merged with the country's largest public sector bank State Bank of India. Apart from this, Vijaya Bank and Dena Bank were merged with Bank of Baroda. At present, there are 12 public sector banks in the country.
The effect of the merger is starting to show as the earnings of the banks have increased. Despite the coronavirus pandemic, in the financial year 2020-21, public sector banks earned for the first time in five years. The total earnings of 12 banks stood at Rs 31,817 crore in the last financial year. The problem of bad loans is gradually decreasing, due to which the condition of banks is improving. In the financial year 2019-20, the total loss of public sector banks was 26,015 crores. Only Punjab and Sind Bank and Central Bank suffered losses.
