The government is not considering the merger of more public sector banks (PSBs), Minister of State for Finance Pankaj Chaudhary informed the Rajya Sabha on Tuesday. While responding to a query, he highlighted that the last consolidation which took place in 2019, merged 10 banks into four. To add to his response, Chaudhary highlighted that the government has implemented several measures to support the financial health of PSBs.

He also added the post-merger improvements in key financial metrics. According to the RBI (Reserve Bank of India) data, Punjab National Bank’s (PNBs) capital to risk-weighted assets ratio rose to 16.36% as of September, compared to 12.67% pre-merger, and its common equity tier-1 capital ratio improved to 11.59% from 9.55% before the merger, and its gross non-performing assets (NPAs) ratio dropped significantly from 13.79% to 4.48%. Several other banks including Bank of Baroda, Canara Bank, Union Bank of India, and Indian Bank, also showed improved capital adequacy and asset quality metrics.

The finance minister noted that the consolidation of PSBs has driven geographical diversification, expanded market penetration, and increased financial inclusion by extending services to underserved areas. This has stimulated economic growth in remote regions, as per Chaudhary. He added that the mergers have led to improvement across all financial parameters, enhancing operational efficiencies through improved synergies, economies of scale, and technology integration.

The mergers took effect from April 1, 2020, where Oriental Bank of Commerce and United Bank of India were merged into Punjab National Bank (PNB), Andhra Bank and Corporation Bank joined Union Bank of India, Syndicate Bank merged with Canara Bank, and Allahabad Bank merged with Indian Bank. In 2019, Vijaya Bank and Dena Bank were integrated into Bank of Baroda.

Chaudhary concluded that these reforms have strengthened systemic checks and controls, reducing the likelihood of financial stress in the future.