The government said the mega bank consolidation plan is very much on track and will take effect from April 1, 2020 despite the onslaught of coronavirus pandemic throwing the country out of gear. The Union Cabinet earlier this month approved amalgamation of 10 public sector banks into four global size lenders, beginning next financial year. Asked if the government is considering extending the deadline for merger of public sector banks, Finance Minister Nirmala Sitharaman said "at the moment there is nothing on that".

Banking Secretary Debasish Panda said the merger process is very much on track and expressed hope that the banking sector would be able to meet the challenges thrown by the pandemic. "That is very much on the track. It's parallel activity going on.

As far as fund transfers etc are concerned, necessary arrangements will be made," Panda said. As per the earlier announcement by the government, Oriental Bank of Commerce (BSE:500315) and United Bank of India (BSE:500315) will be merged with Punjab National Bank (BSE:532461), while Andhra Bank (BSE:532418)and Corporation Bank (BSE:532179) will be amalgamated with Union Bank of India. Syndicate Bank (BSE:532276) and Allahabad Bank (BSE:532480) will be merged with Canara Bank (BSE:532483) and Indian Bank (BSE:532814), respectively.

The merger will result in creation of seven large PSBs with scale and national reach, with each amalgamated entity having business of over INR 8 lakh crore and it would help create banks with scale comparable to global banks and capable of competing effectively in India and globally. In addition, consolidation would also provide impetus to amalgamated entities by increasing their ability to support larger ticket-size lending and have competitive operations by virtue of greater financial capacity.