The central government is once again planning a major change in the public sector banking system.
The aim is to make banks stronger, more competitive, and more efficient for customers.
Here’s a simple breakdown of what this could mean.
Union Bank and Bank of India Merger on the Cards
The government is preparing a proposal to merge Union Bank of India and Bank of India. Sources close to the matter say discussions are already underway.
If this merger goes through, the new entity will become the second largest public sector bank in India, right after State Bank of India (SBI).
The combined bank is expected to have assets worth around ₹25.67 lakh crore, making it bigger than several existing public sector banks.
How This Will Change the Banking Landscape
At present, Bank of Baroda holds assets of about ₹18.62 lakh crore.
A merger between Union Bank and Bank of India would push the new bank ahead of Bank of Baroda in size.
India’s largest public sector bank will still remain SBI, but the gap between the top banks may narrow, increasing competition in the sector.
This could lead to improved services and better options for customers.
More Bank Mergers Under Government Review
Earlier media reports had suggested that the Finance Ministry was also studying the possible merger of Indian Overseas Bank and Indian Bank, both based in Chennai.
In addition, banks like Punjab & Sind Bank and Bank of Maharashtra are also under review.
Since these banks have smaller asset bases, the government may consider merging or even privatizing them in the future.
Fewer but Stronger Public Sector Banks
Between 2017 and 2020, the government merged 10 public sector banks into four. As a result, the total number of public sector banks dropped from 27 to 12.
Large mergers during 2019–2020, such as the consolidation of Andhra Bank and Corporation Bank with Union Bank, helped improve financial strength and operational efficiency.
The current proposal follows the same strategy.
What This Means for Customers
Although no official announcement has been made yet, this merger could reduce duplicate operations, lower costs, and improve profitability.
For customers, it may result in better digital services, stronger banks, and wider reach.
If finalized, this move could mark another historic moment in India’s banking reforms.
