Bank Merger: Canara Bank and Union Bank may be Merged, Check Details!!

The Government of India is preparing a big plan to reorganise public-sector banks. If this plan is approved, the number of government-owned banks will come down from 12 to just four by the financial year 2027. According to sources and report published by Money Control, these four banks will be State Bank of India (SBI), Punjab National Bank (PNB), Bank of Baroda (BoB) and a new large bank formed by merging Canara Bank and Union Bank of India. The Finance Ministry is working on the proposal with the main aim of strengthening the banks, improving their financial health and making them strong enough to compete with global lenders.

Canara Bank and Union Bank are expected to be merged first. The government is also studying whether Indian Bank and UCO Bank can be integrated into this same structure. Once completed, these banks, along with SBI, PNB and BoB, will become the main pillars of the public-sector banking system. Other mid-sized banks such as Indian Overseas Bank, Central Bank of India, Bank of India and Bank of Maharashtra may be merged into SBI, PNB or BoB. A final decision on Punjab & Sind Bank is yet to be taken.

Before the plan is implemented, it has to pass through several approval stages. First, it will be placed before the Finance Minister. After that, it will be reviewed by senior officials, examined by the Prime Minister’s Office and checked by SEBI because the decision could affect the stock market. Only after all clearances will the mergers move forward.

The government believes that creating larger and stronger banks will help meet the country’s growing need for credit. Bigger banks can handle large loans, support infrastructure projects and match the growth of private sector banks. Officials also feel that mergers will help cut costs, remove duplicate branches and make better use of capital. They say that this round of consolidation may be smoother than the earlier one because banks today have stronger balance sheets, better systems and more experience in handling mergers.

If this plan becomes a reality, it will be the second major phase of bank consolidation after the 2017–2020 reforms, which reduced the number of state-owned banks from 27 to 12. The new proposal aims to take this change further and build a smaller number of much stronger public-sector banks that can support India’s future growth.