The Indian government is reportedly moving forward with its plan to consolidate public sector banks, with preparations underway to merge Union Bank of India and Bank of India into a single large lender.
Sources suggest that due diligence and internal planning are in progress, and the merger could be finalized by the end of 2026.
Creating a Bigger Public Sector Bank
If the merger goes through, the new bank would combine the operations, assets, and branch networks of both institutions, making it one of the largest public sector banks in India.
Combined assets: Around ₹25.4 lakh crore (FY24–25)
Ranking: Likely the second-largest PSB after State Bank of India
Reach: Expanded footprint across urban and rural markets
Analysts say the consolidation follows previous rounds of bank mergers aimed at reducing the number of standalone PSBs while increasing efficiency and scale.
Why the Merger Is Being Considered
The government has been consolidating banks to strengthen financial stability, improve efficiency, and reduce duplication in operations.
Benefits of this merger could include:
Greater capital depth and improved lending capacity
Broader products and services for customers
Cost efficiencies and operational synergies
Policymakers have also indicated that further banking reforms or consolidations may follow to make public sector banks globally competitive and resilient.
What Comes Next
Both banks are currently conducting due diligence and integration planning, including evaluating:
Technology systems
Operational processes
Workforce alignment
Before the merger can be finalized, steps will include regulatory approvals, government notifications, and finalizing merger terms.
Customers and investors can expect formal announcements once approvals are in place.
Integration is expected to be smooth, with minimal disruption to services and accounts.
