The schemes for the merger of ten state-run banks into four lenders are coming into force from April 1, according to the Reserve Bank of India. The banking regulator in separate releases announced that the branches of merging banks will operate as of the banks in which these have been amalgamated. The government on March 4 had notified the amalgamation schemes for 10 state owned banks into four as part of its consolidation plan to create bigger size stronger banks in the public sector.


Bank officers' unions, however, earlier this week wrote to the prime minister seeking to defer the merger schemes of lenders due to the lockdown triggered by coronavirus outbreak. Finance Minister Nirmala Sitharaman on Thursday had clarified that the mega bank consolidation plan was very much on track and would take effect from April 1 despite the onslaught of coronavirus pandemic throwing the country out of gear.


As per the scheme, Oriental Bank of Commerce and United Bank of India will be merged into Punjab National Bank; Syndicate Bank into Canara Bank; Allahabad Bank into Indian Bank; and Andhra and Corporation banks into Union Bank of India.


Under this, the branches of Oriental Bank of Commerce and United Bank of India will operate as branches of Punjab National Bank from April 1, 2020, and branches of Syndicate Bank as that of Canara Bank, the RBI said in a separate releases.


Allahabad Bank branches will operate as those of Indian Bank while the branches of Andhra Bank and Corporation Bank will function as the branches of Union Bank of India from the beginning of next fiscal year 2020-21, the RBI said.


"The Amalgamation of Oriental Bank of Commerce and United Bank of India into Punjab National Bank Scheme, 2020 dated March 4, 2020, issued by the Government of India… The scheme comes into force on the 1st day of April 2020," RBI said.


In a letter written to the Prime Minister on March 25, the All India Bank Officers'' Confederation (AIBOC) said, "The finance minister yesterday announced a slew of measures in view of the deleterious effect of the contagion. We are also expecting an extension of closing related activities and the revision of the closing date itself from March 31 to June 30, which is the need of the hour."


Customers, including depositors of merging banks will be treated as customers of the banks in which these banks have been merged with effect from April 1, 2020, the RBO noted. Banking services across the country are impacted due to the effect of COVID-19 as a near shut down is being observed across the country.


Union Bank of India

Union Bank said implementation of all the processes under amalgamation will happen without much disruption to customers and employees of Andhra Bank and Corporation Bank. "There will be revenue generation due to cost cutting on account of branch rationalisation and also on the technology side. We are looking at more than Rs 2,500 crore of synergy benefits in the next three years," Union Bank of India's Managing Director and CEO Rajkiran Rai G told in a telephonic interview.The combined entity will have 9,500 branches and 12,000 ATMs across the country.


"Of the 9,500 branches, we have identified 700 plus branches that will be rationalised because of the proximity, but it will not happen immediately. Maybe around 300 branches will be rationalised in the first year," Rai said.

The amalgamation will create an employee base of 75,000, of which 37,000 are from Andhra Bank and Corporation Bank put together. Rai said the technology integration is likely to take one year.


"By September, Corporation Bank will get integrated and Andhra Bank by December. After that it will take three more months for on boarding of net banking and mobile banking," he said, adding that there is some slowdown in few processes owing to the lockdown but the bank is working around to deal with those issues.

I want to give comfort that there will be minimum disruption or zero disruption for customers and staff," he said.


The interoperability for basic banking services like fund transfers, cash deposits for the customers of Andhra Bank and Corporation Bank has already been put in place.


On the deposit side, customers of the three banks will be offered the same products from the start, he said.


He said some of the departments of the combined entity may be relocated to utilise the headquarters of Andhra Bank and Corporation Bank at Hyderabad and Mangalore, respectively.

A few residential and commercial properties of Andhra Bank and Corporation Bank have been identified and they will also be disposed of gradually, he added.