10 PSU banks merge – Here’s how it affects you

3 min read
September 01, 2019

First things first- don’t panic.

The finance minister Nirmala Sitharaman recently announced the merger of public sector banks. From 10, these banks have been reduced to 4. The bank merger was primarily done to strengthen the dwindling Indian economy. Yet, many of us are confused as to how the merger of banks affects our day to day banking operations[sc_fs_multi_faq headline-0=”p” question-0=”Which banks have been merged?” answer-0=”Punjab National Bank, Oriental Bank of Commerce, United Bank will become a single entity amongst others.” image-0=”” headline-1=”p” question-1=”How does the bank merger affect consumers?” answer-1=”Account number & customer IDs, IFSC codes, bank fees & branches, may be changed.” image-1=”” headline-2=”p” question-2=”How to prepare for the bank merger?” answer-2=”Make sure that your email ID & mobile number is up to date with your bank so you don’t miss an important update. ” image-2=”” count=”3″ html=”false” css_class=””].

Impact on bank customers

Mergers can mostly prove to be positive for consumers. It can affect you if you are a customer of one or more banks that have merged.

List of latest bank mergers

In any case, there will be no immediate or troubling impact for at least 18 months as it takes time to integrate the IT systems with the latest changes.

List of things the bank merger may change

  1. Account number & customer IDs: Different bank accounts will be merged under a single customer ID. You will have to update the standing instructions for credit of dividends, salary, or debit of the phone, electricity bills etc.
  2. IFSC codes: When the State Bank of India started acquiring banks in 2008, 1300 new IFSC codes were made and the branches were renamed. This affected those who had ECS or standing instructions running with the acquired banks for mutual funds, or other such purposes.
  3. Loan transfer: As a borrower, your loan may be transferred in the name of the anchor bank under which your bank would operate.
  4. Bank fees: Savings account rates and bank fees may rise or fall depending upon the merger’s terms and conditions.
  5. Closure of branches: Old branches existing in the vicinity of better-performing branches may shut down. This is unlikely as the Finance Minister has stated that no jobs will be lost as a result of the merger.
  6. New cheque books: Your existing cheque book will remain valid for some time. Eventually, they’ll be replaced with new cheque books issued under the name of the merged bank.
  7. Replacing debit/credit cards: Debit or credit cards issued by a bank getting merged will be eventually replaced by the cards issued by the new entity. Your existing card will remain operational until an announcement is made on the subject.
  8. Impact on shareholders: Publicly listed banks have shareholders. The impact on shareholders will be assessed once the swap ratios are announced.

Have a complaint with a bank? Raise your issue here.

How to be prepared for the bank merger?

Often, it takes at least 2-3 months to initiate changes and move accounts to the new IT system. Meanwhile, make sure that your email ID & mobile number is up to date with your bank so you don’t miss out on an important update. You should continue to pay your EMIs as usual. The loan interest rates won’t change since you signed an agreement.

Experts suggest that bank customers will be able to get better services and products once the bank merger is put in motion. Meanwhile, if you encounter any issue with your bank, you can start your complaint here:

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