After merger, Karnataka will be left with only one PSB

Of the five Karnataka-based public sector banks, two have ceased to exist, while two more will cease to exist soon, in a span of three years, as government continues on the aggressive consolidation of the PSBs.

In April 2017, the first in the series of the PSB mergers, saw State Bank of Mysore, along with five other associate banks merged with India’s largest public sector lender - State Bank of India. A large chunk of the merged entities' employees were forced into the voluntary retirement scheme (VRS).

Two years after that, in April 2019, yet another public sector bank from the state, Vijaya Bank merged with the Bank of Baroda and Dena Bank, under the banner of Bank of Baroda, despite the vehement opposition by the Vijaya Bank employees. Till its merger with Bank of Baroda and Dena Bank, Vijaya Bank was the best performing PSB in the country in terms of asset quality. It had the lowest NPA ratio among the 21 PSB existing back then.

Now, on Friday, the government announced four mergers of PSBs, that will include three from the state—Canara Bank, Syndicate Bank and Corporation Bank – among whom two will cease to exist. While Syndicate Bank would be merged with yet another Karnataka-based bank – Canara – a move expected to create fourth largest PSB in India with expected business of 15.20 lakh crore. The move will also create third largest branch network in India, with 10,342 branches. Syndicate Bank has been facing turbulence in the recent past, as has been reporting huge losses.

On the other Karnataka-based bank that will cease to exist after Friday’s announcement will be Corporation Bank, that will be merged with Union Bank of India and Andhra Bank.