Public Sector Banks Merger – How it would impact you?
In order to achieve Mr.Narendra Modi’s dream of $ 5 Trillion Economy, Nirmala Sitaraman, the Finance Minister as one of the measure has announced merger of 27 Public Sector Banks into 12 NextGen PSBs. Earlier, when associate banks got merged with SBI, account holders of associate banks and investors in mutual fund schemes have faced certain issues. In this article we would highlight how an account holder or investor in stocks or mutual funds would impact with this Public Sector Banks Merger in India.
Which PSBs are getting merged in India now?
While some of the banks already merged, currently there are 27 PSBs and these would be merged only into 12 large Nextgen Public Sector Banks (PSBs). Here are the list of 12 PSBs that would be formed by merger of other banks into it.
#1 PNB as Anchor Bank
Banks like OBC, United Bank of India would get merged with it.
#2 – Canara Bank as Anchor Bank
Syndicate bank would get merged with this bank
#3 – Union Bank of India as Anchor bank
Andhra Bank and Corporate bank would get merged with it.
#4 – Indian Bank as Anchor bank
Allahabad bank would get merged with it.
#5 – SBI – Associated banks are already merged
#6 – Bank of Baroda – Merger already happened earlier
#7 – Bank of India
#8 – Central Bank of India
#9 – Indian Overseas Bank
#10 – UCO Bank
#11 – Bank of Maharastra
#12 – Punjab and Sind Bank
Public Sector Banks Merger – How it would impact you?
Now let us see how this would impact you:
#1 – Impact to Mutual Fund Investors
As a mutual fund investor, you would have provided ECS, auto debit, NACH forms for your Systematic Investment Plan (SIP) in mutual funds. Once the merger of PSBs happens, if you are part of anchor bank or amalgamating banks, you need to re-issue ECS or auto debit forms / instructions one more time.
#2 – Impact to Bank Account holders
You might have bank account with any of the anchor or amalgamating banks. While your salary auto credit can be taken care by your employer with concerned bank, there are few things which you need to take care as an account holder. You may need to get new cheque books for making payments. You need to recreate auto debits / auto transfers to other banks in your internet banking, which you would have given standing instructions earlier. IFSC Codes of the banks would get changed, you may need to consider new ones for your monthly transactions or standing instructions.
#3 – Debit and Credit cards
Debit and credit cards would get changed for the merged bank accounts. You may need to have a back-up plan for some time in case these are stopped or under hold due to merger (which is extreme case but can still happen).
#4 – Bank Fixed Deposits
If you have bank FDs, these would be transferred to the merged bank. You need to keep an eye on these transfers and note the new bank FD account numbers. There is no clarity about what would be the new interest rates. However, if you invested in Fixed Deposits for long term, the interest rates offered on your FDs at the time of opening should ideally continue in merged banks too.
#5 – Home Loans EMI
Your home loan EMIs auto debits might have an impact. You may need to check with the merged bank if you need to provide new set of documents for the Housing loan EMI debit.
#6 – Investor in these PSB Banks
If you are the shareholder of any of these banks, merger would automatically happen in your demat account. However we would get clarity in coming days about the proportion of anchor bank shares that would be issued for the amalgamating banks shares. In some cases you might gain and some cases you might loose the value of your shares.
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Suresh KP
Public Sector Banks Merger – How it would impact you
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When will banks merge start?
the process would start soon. Dates would be announced soon
Hi Suresh ji,
It is United bank of India which is getting merged in to PNB not Union bank of India, I think you mistyped by chance.
Thanks,
Prashanth
Point.1 has PNB as anchor bank and United bank is being indicated that it would merge with PNB. Point 3 has Union bank as anchor bank and other banks are getting merged with it. The data is correct. Pls check one more time and let me know where is issue?