PSU bank merger: How it impacts you as a customer
The Indian government's ongoing merger of certain public sector banks will bring in a range of sweeping changes for customers of eight banks starting today (April 1). Depending on the bank, customers will need to keep track of changes in their account number, cheque book, cards, Indian Financial System Code (IFSC) and Magnetic Ink Character Recognition Code (MICR). Here's everything you need to know.
Beginning April 1, checkbooks of most banks getting merged will be invalid, meaning that customers will need to get new chequebooks from anchor banks—the banks that other banks will get merged into. However, some banks like Syndicate Bank could extend this deadline. IFSC and MICR codes, needed for money transfers, might stay the same or change depending on the bank.
Anchor banks are larger public sector banks that act as vessels for the merger of smaller banks and help the consolidation process along. They are banks that retain their core identities and their customers face relatively fewer changes in terms of banking.
While banks are unlikely to tinker with interest rates on fixed deposits immediately, anchor banks will likely align them with their existing rates eventually. With most banks, customers can continue to use their old cards till expiry, following which the new bank's cards would be issued. It will be imperative for customers to keep track of individual banks as the mergers take effect.
The government began the process of merging ten public sector banks in 2019 in a bid to reduce their number, aiming to create three or four large banks. The number of banks will drop to 12 from 21 currently. According to the Finance Minister Nirmala Sitharaman, the merger will help banks manage capital more efficiently with an emphasis on ironing out bad loans
The government has announced the infusion of a hefty Rs. 55,000 crore into public sector banks for the initiative. Oriental Bank of Commerce and United Bank of India will be merged into Punjab National Bank, Syndicate Bank will be merged into Canara Bank, Indian Bank with Allahabad Bank, while Union Bank of India will hitch its wagon to Andhra Bank and Corporation Bank.