IOB offers a range of banking and financial products and services to individuals, small and medium-sized enterprises, and large corporations. These include savings accounts, current accounts, retail products, Indian Overseas Bank cards, term deposits, and third-party insurance. The bank also provides corporate and rural banking services, such as micro, small, and medium enterprise schemes and merchant banking.
IOB has a strong presence in India, with a network of branches across the country, and also operates in other countries, including Singapore, Hong Kong, Sri Lanka, and Thailand. As of March 2022, IOB has 3,269 domestic branches, Digital Banking Units, and foreign branches and representative offices. IOB was one of the 14 major banks nationalized by the Indian government. In February 2024, Indian Overseas Bank reached ₹1 lakh crore in market capitalization, becoming the fifth public sector lender to reach this milestone
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India Plans to Consolidate State-Run Banks in Next Phase of Mergers, Aiming to Create Lenders of Global Proportions
The Government of India is preparing for the next round of consolidation of public sector banks (PSU banks) with the goal of creating large, globally competitive lenders. The aim is to support India’s long-term economic ambitions and achieve the vision of a developed India by 2047. Finance Minister Nirmala Sitharaman has emphasized the need for several large, world-class banks to raise capital, compete globally, and finance large infrastructure and development projects.
Currently, India has 12 public sector banks, with the State Bank of India (SBI) being the largest, ranking 43rd among the world’s top 50 banks. PSU banks account for nearly 60% of the country’s total banking business, making them strategically important in India’s financial system. The government is considering merging small and mid-sized PSU banks with larger lenders, with banks such as Indian Overseas Bank, UCO Bank, and Bank of Maharashtra potentially being merged with larger banks like SBI, Punjab National Bank, or Bank of Baroda.
This is not the first round of consolidation in the Indian banking sector. Since 2017, the number of PSU banks has decreased from 27 to 12 through a series of mergers. Key mergers include the merger of United Bank of India and Oriental Bank of Commerce with Punjab National Bank, and the merger of Dena Bank and Vijaya Bank with Bank of Baroda. SBI has also absorbed five associate banks and Bharatiya Mahila Bank, expanding its balance sheet and branch network.
In addition to consolidation, the government is also progressing with the strategic disinvestment of IDBI Bank. The Department of Investment and Public Asset Management (DIPAM) Secretary has indicated that the transaction is expected to be completed by March 2026. The government had sold a 51% stake in IDBI Bank to LIC in 2019, and the remaining stake is now slated for sale to private investors. The goal of these efforts is to create a stronger and more competitive banking sector that can support India’s economic growth and development.
PSB Merger to Pick Up Pace by 2026: Canara Bank, Bank of Maharashtra, and IOB in Focus – Key Highlights via Upstox
The Indian government is expected to accelerate the consolidation of public sector banks (PSBs) in 2026, with several key developments on the horizon. The consolidation process, which began in 2019, aims to create larger, more efficient banks that can compete with private sector lenders. Here are the key points to know:
Background: The Indian government has been working to consolidate the country’s PSBs to improve their efficiency, reduce bad loans, and increase their competitiveness. In 2019, the government merged 10 PSBs into four larger banks, reducing the total number of PSBs from 27 to 12.
Next phase of consolidation: The government is expected to announce the next phase of consolidation in 2026, which may involve the merger of more PSBs. Canara Bank, Bank of Maharashtra, and Indian Overseas Bank (IOB) are likely to be part of this phase.
Key banks involved: Canara Bank, one of the largest PSBs, is expected to play a key role in the next phase of consolidation. Bank of Maharashtra, which has shown significant improvement in its financial performance, may also be involved. IOB, which has been struggling with high bad loans, may be merged with another bank to improve its financial health.
Benefits of consolidation: The consolidation of PSBs is expected to bring several benefits, including improved efficiency, reduced costs, and increased competitiveness. Larger banks will have more resources to invest in technology, talent, and marketing, enabling them to better compete with private sector lenders.
Challenges ahead: While consolidation is expected to bring benefits, it also poses several challenges, including the integration of different cultures, systems, and processes. The government will need to ensure that the merger process is smooth and does not disrupt banking services.
Timeline: The government is expected to announce the next phase of consolidation in 2026, with the merger process likely to be completed by 2028. The exact timeline will depend on various factors, including the complexity of the merger and the regulatory approvals required.
Impact on customers: The consolidation of PSBs is unlikely to have a significant impact on customers, as the merged banks will continue to operate under the same brand names and offer the same services. However, customers may benefit from improved services, such as better technology and more convenient banking channels.
Overall, the consolidation of PSBs is a key part of the Indian government’s plan to strengthen the banking sector and improve its competitiveness. While there are challenges ahead, the benefits of consolidation are expected to outweigh the costs, leading to more efficient and competitive banks that can support India’s economic growth.
Budget Announcement on PSU Bank Consolidation: Expectations for IOB, UCO, BOI, BOM, and Central Bank Merger Plans
The Indian government is expected to make significant announcements regarding the merger of Public Sector Banks (PSBs) in the upcoming budget. The merger of banks such as Indian Overseas Bank (IOB), UCO Bank, Bank of India (BOI), Bank of Maharashtra (BOM), and Central Bank of India is anticipated to be a key aspect of the budget.
The government’s plan to merge PSBs aims to create larger and more efficient banks, which can compete with private sector banks. The merger is expected to lead to improved financial health, increased lending capabilities, and enhanced customer services. Additionally, the merger will help in reducing the number of PSBs, making them more manageable and allowing for better allocation of resources.
The merger of IOB, UCO, BOI, BOM, and Central Bank is seen as a significant step towards consolidation in the banking sector. The government has already merged several PSBs in the past, resulting in the creation of larger banks such as State Bank of India (SBI), Punjab National Bank (PNB), and Canara Bank. The upcoming merger is expected to further strengthen the banking sector and improve its overall performance.
The budget announcement is expected to provide details on the merger, including the timeline, structure, and benefits for customers and employees. The government may also announce measures to support the merged banks, such as capital infusion, rationalization of branches, and implementation of new technologies. The merger is likely to have a significant impact on the banking sector, and the budget announcement will be closely watched by stakeholders, including customers, employees, and investors.
In recent years, the government has taken several steps to strengthen the banking sector, including the implementation of the Insolvency and Bankruptcy Code (IBC) and the establishment of the National Company Law Tribunal (NCLT). The merger of PSBs is seen as a key aspect of this effort, aimed at creating a more robust and efficient banking system. The upcoming budget announcement is expected to provide further details on the government’s plans for the banking sector and the merger of PSBs.
Overall, the merger of PSBs is a significant development in the Indian banking sector, and the budget announcement is expected to provide important details on the government’s plans. The merger is likely to have a positive impact on the banking sector, leading to improved financial health, increased lending capabilities, and enhanced customer services. The government’s efforts to strengthen the banking sector are expected to continue, with the merger of PSBs being a key aspect of this effort.
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Major Development in PSU Bank Consolidation: IOB, UCO, BOI, BOM, and Central Bank Under Consideration for Merger – What’s the Timeline for the Next Phase of PSB Consolidation?
The Indian government is planning to initiate the next phase of public sector bank (PSB) mergers, with several banks on the radar, including Indian Overseas Bank (IOB), UCO Bank, Bank of India (BOI), Bank of Maharashtra (BOM), and Central Bank of India. The merger of these banks is expected to be a significant step towards consolidation in the Indian banking sector.
The government had earlier merged 10 PSBs into four large banks, resulting in the creation of mega banks such as State Bank of India (SBI), Punjab National Bank (PNB), Bank of Baroda (BoB), and Canara Bank. The merger aimed to create stronger and more competitive banks, with improved financial health and increased lending capacity.
The next phase of the merger is expected to be more challenging, as it involves banks with weaker financials. The government is likely to consider factors such as the banks’ financial performance, asset quality, and regional presence before deciding on the mergers. The merger process is expected to be completed in a phased manner, with the first phase likely to involve the merger of smaller banks.
The banks on the radar, including IOB, UCO Bank, BOI, BOM, and Central Bank of India, have been struggling with high non-performing assets (NPAs) and weak financial performance. The merger is expected to help these banks improve their financial health and increase their lending capacity.
The government has not yet announced a specific timeline for the next phase of the merger. However, it is expected to happen soon, as the government is keen to complete the consolidation process in the banking sector. The merger is also expected to lead to job losses, as the merged entity will likely have a reduced workforce.
The PSB merger is part of the government’s broader plan to reform the banking sector and improve its efficiency. The government has also announced several other measures, including the establishment of a bad bank to take over stressed assets and the introduction of a new bank licensing policy. The measures aim to strengthen the banking sector and improve its ability to support economic growth.
In conclusion, the next phase of the PSB merger is expected to involve the merger of several smaller banks, including IOB, UCO Bank, BOI, BOM, and Central Bank of India. The merger is expected to be a significant step towards consolidation in the Indian banking sector and is likely to lead to the creation of stronger and more competitive banks. However, the process is expected to be challenging, and the government will need to carefully consider the financial performance and asset quality of the banks involved.
Should SBI, PNB, and BOB Lead the Next PSU Bank Merger, and What’s the Future for BOI, IOB, BOM, and UCO?
The Indian government’s plan to merge public sector banks (PSBs) has been a topic of discussion in recent years. The goal is to create larger, more efficient banks that can compete with private sector banks. The recent merger of 10 PSBs into four larger banks has been seen as a success, with the merged entities showing improved financial performance. Now, the question is whether the big banks, such as State Bank of India (SBI), Punjab National Bank (PNB), and Bank of Baroda (BOB), should take part in the next merger.
The government has indicated that the next phase of mergers will involve smaller banks, with Bank of India (BOI), Indian Overseas Bank (IOB), Bank of Maharashtra (BOM), and UCO Bank being considered. These banks have been struggling with high non-performing assets (NPAs) and low capital adequacy ratios. Merging them with larger banks like SBI, PNB, and BOB could help them gain scale and improve their financial health.
However, there are arguments against involving the big banks in the next merger. One concern is that it could lead to cultural and operational challenges, as the merged entities would have to integrate different systems and processes. Additionally, the big banks may not want to take on the burden of the smaller banks’ NPAs and other legacy issues.
On the other hand, involving the big banks in the merger could bring several benefits. It could help them expand their reach and customer base, and gain access to new markets and products. It could also help the government achieve its goal of creating fewer, larger banks that can compete with private sector banks.
The potential benefits of the merger for the smaller banks are clear. BOI, IOB, BOM, and UCO Bank would gain access to more resources, expertise, and technology, which could help them improve their financial performance and competitiveness. The merger could also help them reduce their NPAs and improve their capital adequacy ratios.
In conclusion, while there are valid arguments for and against involving the big banks in the next merger, the potential benefits of the merger for the smaller banks are significant. The government should carefully consider the pros and cons and make a decision that is in the best interest of the banking sector and the economy as a whole. If the big banks are involved in the merger, it could lead to the creation of even larger, more efficient banks that can compete with private sector banks and support the country’s economic growth.
Consolidation of PSU Banks: SBI Chief Suggests Additional Mergers Could Be Beneficial As Government Considers Major Overhaul | Business News
The chairman of the State Bank of India (SBI), CS Setty, has expressed support for the Indian government’s plan to merge smaller public sector banks with larger lenders. In an interview with Bloomberg, Setty stated that there is a need for further rationalization in the banking sector, as some smaller banks are still sub-scale. He suggested that another round of consolidation may not be a bad idea, which could lead to the next level of growth and scale in India’s financial space.
The government is considering a plan to merge several small lenders, including Indian Overseas Bank (IOB), Central Bank of India (CBI), Bank of India (BOI), and Bank of Maharashtra (BOM) with larger public sector banks such as Punjab National Bank (PNB), Bank of Baroda (BoB), and SBI. This proposed mega merger is aimed at supporting the next phase of credit expansion and financial sector reforms.
The plan is expected to be taken up at the Cabinet level and then examined by the Prime Minister’s Office (PMO). This renewed merger push diverges from NITI Aayog’s earlier suggestion to privatize or restructure smaller public sector banks. NITI Aayog had recommended that only a few large state-run lenders, including SBI, PNB, BoB, and Canara Bank, be retained under government control, while the remaining PSBs should either be merged, privatized, or have their government stake reduced.
The proposed merger is expected to drive growth and increase the efficiency of the banking sector. Setty’s support for the plan indicates that the banking industry is open to consolidation, which could lead to the creation of larger, more competitive banks. The government’s plan to merge smaller banks with larger lenders is a significant step towards achieving this goal.
The merger plan is also expected to support the next phase of credit expansion and financial sector reforms. The Indian government has been working to strengthen the banking sector and improve its efficiency, and the proposed merger is a key part of this effort. The plan is expected to be implemented in the near future, and it will be interesting to see how it unfolds and what impact it has on the banking sector.
Overall, the proposed merger of smaller public sector banks with larger lenders is a significant development in the Indian banking sector. It is expected to drive growth, increase efficiency, and support the next phase of credit expansion and financial sector reforms. The support of the SBI chairman for the plan indicates that the banking industry is open to consolidation, and the government’s plan is a significant step towards achieving this goal.
Latest Bank Update: Will Indian Overseas Bank, Central Bank of India, and Bank of India Merge with SBI and Canara Bank?
The Indian government is planning a major overhaul of the country’s banking system by merging smaller public sector banks with larger ones. Finance Minister Nirmala Sitharaman emphasized the need for a world-class banking system, with the goal of expanding Indian banks to become among the top global banks. The proposed mega-merger plan aims to create larger, more reliable public sector banks. Except for the State Bank of India, Canara Bank, Punjab National Bank, and Bank of Baroda, all other banks in the country could be merged.
Sitharaman stated that discussions have begun with banks to determine how they wish to proceed with the merger. The Reserve Bank of India is also being consulted to gather their views on creating larger banks. According to media reports, the second phase of the merger plan may involve merging Indian Overseas Bank, Central Bank of India, Bank of India, and Bank of Maharashtra with larger banks like Punjab National Bank, Bank of Baroda, and State Bank of India.
This is not the first time the government has undertaken bank mergers. In 2017, five associate banks of SBI and Bharatiya Mahila Bank were merged with the State Bank of India. In 2019, Vijaya Bank and Dena Bank were merged with Bank of Baroda, and in 2020, Oriental Bank of Commerce and United Bank of India were merged with Punjab National Bank.
The merger is expected to have significant implications for both employees and account holders. While banking deposits, fixed deposits, interest rates, loans, and other services will remain unaffected, account holders may need to obtain new passbooks, chequebooks, and account numbers. Additionally, branch names and addresses may change, requiring customers to visit their bank branches to update their records. Overall, the government’s goal is to create a more robust and efficient banking system that can compete with global banks.
Government to Accelerate PSBs’ Fundraising Efforts with Roadshows Slated for Next Week, Boosting Economy
The Indian government is gearing up to accelerate its fund-raising plans for public sector banks (PSBs) through a series of investor roadshows, starting next week. The Department of Investment and Public Asset Management (DIPAM) will lead the effort, with its Secretary personally participating in the roadshows for Bank of Maharashtra. The goal is to expedite minority stake sales in select lenders, including Bank of Maharashtra, Indian Overseas Bank, Central Bank of India, UCO Bank, and Punjab & Sind Bank.
The roadshows are part of a broader strategy to raise funds for these five PSBs, which are in need of capital to meet regulatory requirements and support their growth plans. The government aims to sell minority stakes in these banks to private investors, which will not only help raise capital but also bring in fresh management expertise and improve governance.
The DIPAM Secretary’s personal involvement in the roadshows highlights the government’s commitment to this initiative. The Secretary will engage with potential investors, showcasing the strengths and growth potential of these PSBs, and addressing any concerns they may have. The roadshows will provide a platform for investors to interact with the bank management and gain a deeper understanding of their business strategies and prospects.
The government’s fund-raising plans for PSBs are ambitious, with a focus on accelerating the growth of these lenders and improving their financial health. The sale of minority stakes is expected to attract significant investor interest, given the potential for long-term returns and the opportunity to participate in the growth of India’s banking sector.
Overall, the launch of the roadshows next week marks an important milestone in the government’s efforts to revitalize the PSBs and put them on a path of sustainable growth. With the DIPAM Secretary’s personal involvement and the participation of potential investors, the stage is set for a successful fund-raising exercise that will benefit both the banks and the investors. The outcome of these roadshows will be closely watched, as it will have significant implications for the Indian banking sector and the country’s economic growth prospects.
Banks are placing early wagers, indicating a corporate credit resurgence may be imminent.
The Indian banking sector is witnessing a resurgence in corporate credit growth, driven primarily by working capital financing and project-linked funding. According to senior bankers, the uptick is modest, but it marks a turn for lenders such as HDFC Bank and Axis Bank, which had earlier slowed their wholesale book due to competitive loan pricing. HDFC Bank’s corporate and other wholesale loan book grew 6.4% year on year and 4.7% on quarter, while Axis Bank’s corporate loan book expanded 20% on year and 11% on quarter.
The pickup in corporate credit comes as yields on government securities have risen, making bank loans more attractive for corporates, especially low-rated ones. The weighted average lending rate on fresh rupee loans of scheduled commercial banks was at 8.75% in August, down from 8.81% a month earlier, making it cheaper for corporates to borrow. Bankers agree that while capex-led demand remains modest, working capital financing and project-linked funding are driving incremental growth.
Public sector banks, such as Punjab National Bank and Bank of India, have also joined the lending rebound, buoyed by a healthy project pipeline and improved corporate balance sheets. Punjab National Bank has total loan sanctions worth ₹1.78 trillion, which are awaiting phased disbursements, while Bank of India reported double-digit growth of nearly 12% on year in its corporate book in Q2.
However, pricing remains a challenge, with corporates seeking loans at unrealistically low rates. Indian Overseas Bank chief executive Ajay Kumar Srivastava said that the issue is not demand, but pricing, as corporates seek loans at around 6%, which is not viable for the bank given its own funding costs. Despite this, the bank has a ₹15,000 crore sanctioned pipeline and expects 12-13% on year growth in its corporate loan book this year, led by manufacturing and PLI-linked sectors.
Overall, the sector-wide uptick in corporate credit growth is expected to strengthen in the coming quarters as sanctioned loans move to disbursement stage and investment activity gradually picks up. Ratings agency Icra has not revised its credit growth estimates for FY26 yet, but expects the cuts in goods and services tax rates to support credit expansion for banks and NBFCs in the near term.
DFS Secretary says government is on track to finalize IDBI Bank stake sale by end of fiscal year 2026.
The government of India has announced plans to undertake an Offer for Sale (OFS) in five public sector banks. The banks in question are Bank of Maharashtra, Indian Overseas Bank, UCO Bank, Central Bank of India, and Punjab and Sind Bank. The primary objective of this move is to reduce the government’s stake in these banks to below 75%. This development is in line with the government’s previous disclosures regarding its plans to dilute its ownership in these financial institutions.
The OFS is expected to have a significant impact on the banking sector, as it will lead to increased private participation in these banks. By reducing its stake, the government aims to infuse fresh capital, improve efficiency, and enhance the overall competitiveness of these banks. The move is also seen as a step towards consolidating the banking sector and making it more resilient to external shocks.
Meanwhile, Axis Bank’s managing director and chief executive, Amitabh Chaudhry, expressed his bank’s enthusiasm for lending to entities seeking acquisition finance. He noted that foreign lenders currently dominate this segment, and Axis Bank is keen to capitalize on this opportunity. Chaudhry also highlighted the relatively new field of private credit, which offers immense potential for growth.
The private sector lender’s interest in acquisition finance is a significant development, as it indicates a shift in the bank’s strategy towards catering to the growing needs of corporate clients. With the government’s plans to divest its stake in public sector banks, private lenders like Axis Bank are likely to play a more prominent role in the banking sector. As the Indian economy continues to grow, the demand for acquisition finance is expected to increase, and Axis Bank is well-positioned to tap into this opportunity.
Overall, the government’s plan to undertake an OFS in five public sector banks and Axis Bank’s interest in acquisition finance are positive developments for the Indian banking sector. These moves are expected to lead to increased private participation, improved efficiency, and enhanced competitiveness, ultimately contributing to the growth and stability of the economy.
Indian Overseas Bank and Bank of Baroda have reduced their MCLR rates by as much as 15 basis points, paving the way for more affordable loan options.
Bank of Baroda (BoB) and Indian Overseas Bank (IOB) have made significant adjustments to their Marginal Cost of Fund-based Lending Rate (MCLR), slashing it by up to 15 basis points (0.15%). This revision, which cuts interest rates, will make MCLR-based loans more affordable for borrowers at these banks. The timing of this move is notable, as it comes just before the start of the festive season, which begins next week.
The festive season, marked by the beginning of Navratri, a nine-day festival considered auspicious for new beginnings, is often a time when people make significant purchases or investments. The reduction in MCLR by BoB and IOB is likely to boost consumer sentiment and encourage borrowing, as lower interest rates make loans more attractive to potential borrowers.
Furthermore, the recent Goods and Services Tax (GST) rationalization, set to take effect from September 22, 2025, coincides with the start of Navratri. This rationalization aims to simplify and reduce GST rates, making various goods and services more affordable for consumers. The combination of lower MCLR rates and GST rationalization is expected to create a positive festive sentiment, driving economic growth and consumer spending.
The reduction in MCLR by BoB and IOB will apply to various types of loans, including personal loans, home loans, and car loans, among others. Borrowers with existing MCLR-based loans may also benefit from the reduced rates, depending on the terms of their loan agreements. As the festive season approaches, the move by BoB and IOB is likely to be followed by other banks, leading to a more competitive lending environment and increased access to credit for consumers.
Overall, the revision in MCLR by BoB and IOB, coupled with the GST rationalization, is expected to provide a stimulus to the economy during the festive season. With lower interest rates and reduced GST rates, consumers are likely to feel more confident about making purchases and investments, driving economic growth and development.