India announced a series of mergers involving 10 state-owned banks into four on Friday, as it moves to strengthen a sector struggling under a mountain of debt and ensure stronger balance sheets to boost lending and revive economic growth.
The mergers, which cut to 12 the total number of state-owned banks, from 27 in 2017, are the first since Prime Minister Narendra Modi’s government won re-election in May. His government has vowed to clean up the banking sector and reduce the number of state-run banks.
Finance Minister Nirmala Sitharaman said Oriental Bank of Commerce and United Bank would be merged with New Delhi-headquartered Punjab National Bank, creating India’s second largest lender after State Bank of India .
The government also announced that two lenders based in southern India, Canara Bank and Syndicate Bank , would be amalgamated.
In addition, Andhra Bank and Corporation Bank are to merge with Union Bank, while Indian Bank will merged with Allahabad Bank.
“We’re trying to build the NextGen banks,” Sitharaman told a news conference.
In 2017, the government merged State Bank of India with its associate banks, and this year, it merged Bank of Baroda with some smaller peers. ($1=71.4920 Indian rupees)