InvestorQ : Is is true that PNB, OBC and PS will merge?
krithika Saxena made post

Is is true that PNB, OBC and PS will merge?

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Dawn Cherian answered.
1 year ago

Yeah, it is true as news around is saying so. After the successful experience with State Bank of India merging to its five of its subsidiaries and Bharatiya Mahila Bank, and the amalgamation of Bank of Baroda, Vijaya Bank, and Dena Bank, government is now looking for another round by amalgamating Punjab National Bank (PNB), Oriental Bank of Commerce (OBC) and Punjab and Singh Bank (PS). The consolidation of these 3 banks is said to boost the lending capacity and thus meet the rising need for credit of fast-growing economy. The merged entity will have a combined business of over Rs16.5 lakh crore, deposits of Rs9.6 lakh crore and advances of close to Rs7 lakh crore.

Merger refers to a combination of two or more entities into a one thereby creating synergy. For example, Company A and Company B come together to form Company C. This company C will be the merged entity as Company A and Company B will move all their assets in company C thus Company A and Company B will cease to exist post formation of Company C.

Merger can happen

  1. between companies of same industry, or
  2. between companies in different industries, or
  3. it could be forward or backward integration wherein companies merging are from same industry but at different level of production

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1 year ago

This seems to be true and will result in consolidation of all assets and liabilities across the 3 banking entities.

This might be a mixed news from a customer perspective. Since I bank with PNB and OBC, I am aware about the products they offer to account holders; especially in terms of Medical Insurance. In fact, I opened an account in PNB especially since it gave additional Mediclaim from me to my parents. I am not sure how this will have an impact on the product portfolios they have individually at present.

Also, bank consolidations have a unique problem; when SBI merged all other State Bank of Hyderabad/ Patiala/ Travancore etc, we had 4 branches of SBI now within 500 mts of each other. Inevitably, there is going to be transfer of accounts between branches and closure of a few branch premises.