The government is once again planning a big change in the public sector banking system.
The aim is to make banks stronger, more competitive, and better equipped to serve customers.
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Union Bank and Bank of India Merger in Focus
According to people familiar with the matter, the government is working on a proposal to merge Union Bank of India and Bank of India.
If this plan moves forward, the merged entity will become the second largest public sector bank in India, after State Bank of India (SBI).
The combined bank is expected to have assets worth around ₹25.67 lakh crore, making it larger than Bank of Baroda, which currently has assets of ₹18.62 lakh crore.
Earlier Merger Plans and Privatization Talk
Earlier media reports suggested that the Finance Ministry was also exploring merger options for Chennai-based banks, including Indian Overseas Bank and Indian Bank.
In addition, banks like Punjab & Sind Bank and Bank of Maharashtra are also being reviewed.
Since these banks have relatively smaller asset bases, the government may consider them for privatization in the future.
Fewer Banks, Stronger System
Between 2017 and 2020, the government merged 10 public sector banks into four.
Because of this, the total number of public sector banks came down from 27 in 2017 to 12.
A major example was the merger of Andhra Bank and Corporation Bank with Union Bank of India during 2019–2020.
That move helped improve efficiency and financial strength.
What This Means for Customers
If the Union Bank–Bank of India merger goes ahead, it could lead to better services, stronger competition, and improved profitability.
Merging large banks helps reduce duplication, lower operating costs, and use resources more effectively.
Although discussions are ongoing and no official announcement has been made yet, this merger—if approved—could mark a historic moment in India’s banking sector.