India Clarifies: No Current Plans for PSU Bank Mergers

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AuthorRiya Kapoor|Published at:
India Clarifies: No Current Plans for PSU Bank Mergers
Overview

Minister of State for Finance Pankaj Chaudhary stated on Monday that the government currently has no proposals under consideration for the merger or consolidation of Public Sector Banks (PSUs). He detailed the positive outcomes of past amalgamations, citing significant business growth in entities like Bank of Baroda and Punjab National Bank. Chaudhary also discussed the EASE Reform Agenda, including EASE 9.0, aimed at enhancing PSU bank competitiveness. The Minister of State for Finance Pankaj Chaudhary also addressed the rupee's market-driven valuation, factors influencing its depreciation, and the Reserve Bank of India's intervention efforts.

No New PSU Bank Mergers Planned

Minister of State for Finance Pankaj Chaudhary confirmed Monday that the government is not currently reviewing any proposals for merging or consolidating its Public Sector Banks (PSUs). This statement clarifies the absence of immediate plans for further consolidation within the state-owned banking sector.

Why Past Bank Mergers Succeeded

Chaudhary highlighted that previous amalgamations have successfully created stronger, more competitive banks by leveraging economies of scale and scope. He noted that these mergers have led to a substantial rise in customer base, market reach, and operational efficiency for the merged entities. This synergy was achieved through improved access to low-cost deposits, increased capacity for large-ticket lending, and enhanced financial strength.

Merged Banks Show Strong Growth

Citing Reserve Bank of India data, the minister provided figures demonstrating the growth in consolidated business post-merger. For instance, Bank of Baroda's business grew from ₹16.1 lakh crore (March 2019) to ₹27.0 lakh crore (March 2025). Similarly, Punjab National Bank's consolidated business expanded from ₹18.3 lakh crore to ₹26.8 lakh crore over the same period. Union Bank of India, Canara Bank, and Indian Bank also reported significant business growth following their respective amalgamations, illustrating the strategic success of these consolidations.

EASE Reforms Drive Bank Competitiveness

Regarding the EASE (Enhanced Access and Service Excellence) Reform Agenda, Chaudhary explained that it is finalized annually under the guidance of the EASE Steering Committee. The EASE 9.0 Reforms Agenda for FY2026-27, launched in February 2026, focuses on building globally competitive PSUs. Key themes include risk and resilience, innovation, socio-economic impact, customer service, AI-enabled workflows, and sustainable finance. The specific metrics for EASE 9.0 are being formulated and are expected to be rolled out by April 2026.

India's Rupee: Market Driven, RBI Manages Volatility

On the Indian Rupee's valuation, Chaudhary stated it is market-determined without a specific target level. The Reserve Bank of India (RBI) monitors the foreign exchange market and intervenes to manage excess volatility. He identified key factors influencing the rupee's exchange rate, including the Dollar Index, capital flows, interest rates, crude oil prices, and the current account deficit. The minister noted that trade deficit increases and rising crude oil prices amid geopolitical tensions in West Asia have pressured the rupee during the current financial year. The RBI sold ₹64,064 crore in the foreign exchange market across 2024 and 2025 to manage currency fluctuations.

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