Amidst circulating speculation on potential PSU bank mergers, a government document shared on social media hints at discussions between Union Bank and UCO Bank, as well as Bank of India and Bank of Maharashtra. The Finance Ministry has clarified that this stems from a parliamentary committee on subordinate legislation, unrelated to bank merger policies. The document, attributed to Ramesh Yadav, Under Secretary of the Government of India, outlines a study visit program scheduled for January 2024 involving informal discussions with the mentioned banks.

The two-day program includes interactions with Union Bank of India and UCO Bank representatives on January 2, and with Bank of Maharashtra and Bank of India representatives on January 4. The focus is on rules and regulations under the Banking Regulations Act 1949 and other applicable Acts, exploring the regulatory mechanism post-merger. Notably, the Finance Ministry revised the meeting agenda, removing any explicit mention of “merger.”

Despite market reactions and increased stock prices for the involved banks, the government denies any proposal for PSU bank mergers, characterizing the discussions as part of routine exercises. Reuters cites Ministry of Finance sources in asserting that no consideration for merging public sector banks is currently underway. Previously, the cabinet approved the State Bank of India acquiring subsidiary banks in 2017, and in 2019, multiple mergers reduced the number of public sector banks.

The latest market responses saw shares of UCO Bank and Union Bank of India closing higher, while Bank of Maharashtra and Bank of India also experienced stock price increases. The overall context remains within the broader history of PSU bank consolidation initiated by the government, with the most recent being the ‘mega consolidation’ of PSBs in 2020. Despite the heightened market activity, the Finance Ministry emphasizes that these discussions are part of routine procedures rather than indicative of an imminent merger.

In summary, while the market responds to speculation around potential PSU bank mergers, the government clarifies that these discussions are part of routine parliamentary committee activities. The Finance Ministry’s revised agenda excludes explicit mention of mergers, and official sources emphasize that no concrete proposal for bank mergers is currently under consideration.

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