The Indian government is reportedly moving forward with its plan to consolidate public sector banks, with Union Bank of India and Bank of India preparing for a potential merger.
Sources suggest that due diligence and internal planning are already underway, and the deal could be finalized by the end of 2026.
Creating One of India’s Largest Public Sector Banks
If the merger goes through, it would combine the operations, assets, and networks of two well-established state-run banks.
The new entity would have a combined asset base of around ₹25.4 lakh crore (FY24-25), making it likely the second-largest public sector bank after State Bank of India.
The merger would also expand the bank’s reach across urban and rural areas, strengthen its balance sheet, and increase its competitiveness with private and foreign lenders.
Analysts say this consolidation continues the government’s earlier efforts to reduce the number of standalone PSBs while improving scale and efficiency.
Why the Merger Is Being Considered
The government has long supported bank consolidation to improve financial stability, operational efficiency, and lending capacity.
Previous mergers have aimed to:
Increase capital depth
Reduce operational duplication
Enhance cost synergies
Offer broader banking products and services
Policymakers have indicated that further consolidation and reforms may continue as part of efforts to create globally competitive and resilient public sector banks.
What to Expect Next
Both banks are currently reviewing technology systems, operational processes, and workforce alignment as part of integration planning.
Key steps before final approval include:
Finalizing merger terms
Obtaining regulatory clearances
Issuing government notifications
Customers and investors can expect formal communication once the merger is officially announced, with integration designed to minimize disruption to existing services and accounts.