The finance ministry on Monday said there is no proposal at present to merge or consolidate public sector banks, even as it noted that past amalgamations have helped create larger, more competitive lenders with improved efficiency and scale.
“Leveraging of networks, better access to low-cost deposits, increased ability to support larger ticket-size lending and competitive operations by virtue of greater financial capacity has provided the amalgamated banks a substantial rise in customer base, market reach and operational efficiency,” minister of state for finance Pankaj Chaudhary said in a written reply in the Lok Sabha.
“Synergy was also gained due to increased scope of operations, and improvement in cost efficiency with adoption of best practices and digitisation,” he said.
The government’s last consolidation drive, announced in August 2019 and implemented from 1 April 2020, has lifted the combined business of major state-run lenders, the minister said.
Bank of Baroda, into which Vijaya Bank and Dena Bank were merged, expanded from ₹16.1 trillion in March 2019 to ₹27.0 trillion in March 2025. Punjab National Bank, which amalgamated Oriental Bank of Commerce and United Bank of India grew from ₹18.3 trillion in March 2020 to ₹26.8 trillion in March 2025.
Union Bank of India, which absorbed Andhra Bank and Corporation Bank grew from ₹15.3 trillion in March 2020 to ₹22.9 trillion in March 2025. Canara Bank, which merged with Syndicate Bank expanded from ₹15.7 trillion in March 2020 to ₹25.3 trillion in March 2025. Indian Bank, which amalgamated Allahabad Bank grew from ₹8.6 trillion in March 2020 to ₹13.3 trillion in March 2025.
Chaudhary said consolidation has strengthened financial soundness and streamlined operations, lowering costs and boosting overall business.
In Union budget FY27, finance minister Nirmala Sitharaman had said the government will soon constitute a high-level committee on banking for Viksit Bharat to draw up a blueprint to create mega lenders capable of meeting the financing needs of a developed India.
At a banking sector review event in October 2025, officials also set a target for two to three state-run banks to enter the world’s top 20 by 2047, signalling a shift from stabilisation to growth and scale.
