Edited By Anu Malhotra,Updated: 01 Nov, 2025 12:50 PM
Another mega change is about to happen in India’s banking landscape. The government is preparing to merge small government banks into big banks. This step is being taken following the recommendation of NITI Aayog, which aims to strengthen the banking system and global…
National Desk: Another mega change is about to happen in India’s banking landscape. The government is preparing to merge small government banks into big banks. This step is being taken following the recommendation of NITI Aayog, the objective of which is to strengthen the banking system and prepare it for global competition.
Whose existence is in danger?
Under this mega merger, Indian Overseas Bank (IOB), Central Bank of India (CBI), Bank of India (BOI) and Bank of Maharashtra (BoM) will cease to exist. The banking process can be a bit challenging for account holders of these banks. They will have to change their chequebooks, passbooks and other paperwork under the new bank.
Proposed merger process
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According to media reports, the draft ‘Record of Discussion’ of the merger has been prepared and it will now be sent to the Cabinet and the Prime Minister’s Office. If approved, this mega merger can be completed in the financial year 2026-27.
Potential advantages and disadvantages of merger
Rising costs and ever-increasing NPAs due to small banks put pressure on the banking system. The merger will strengthen the banking network, increase the capacity to distribute loans and strengthen the balance sheets of the banks. Banking operations will be faster and customers will be able to get better service. However, before this, between 2017 and 2020, 4 big banks were formed by merging 10 government banks, due to which the number of government banks was reduced from 27 to 12.
New map of government banking after merger
If this mega merger happens on time, only 4 big public sector banks will be left in the country:
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State Bank of India (SBI)
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Punjab National Bank (PNB)
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Bank of Baroda (BoB)
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Canara Bank
Impact on account holders and employees
It will take time and effort for account holders to change banking documents after the merger. New check book and pass book will have to be made. There may be job concerns among employees, although the government has assured that the merger will not have a negative impact on jobs.