Merger of PSBs: What should you do?

The announcement made by the Central government on September 17, 2018, about merger of three public sector banks (PSBs) may have come as a surprise for all stakeholders of these banks —including shareholders, depositors and employees. This merger will create yet another PSU monolith which will rank, as an official of the Ministry of Finance put it,“India’s third largest globally competitive bank.”

For the shareholders of these banks, the market will decide the valuation of the merged entity. As for the employees, the merger will not make much of a difference. But it might make some difference to the depositors and borrowers of these banks. For the depositors, their money will remain as safe as it was before the merger since all the merged banks are PSBs and the merged entity will also remain a PSB—and a bigger one at that! However, the depositors and borrowers need to find out the free and chargeable services of the merged entity as also the interest rates on deposits and borrowings. Initially, the interest rates and levies of services are likely to remain the same, but eventually over a period of time, the rates and levies will be aligned with the rates and levies of the new bank.

The new entity will send communication to the depositors and borrowers about the procedure for transition of savings or current accounts, locker facilities, fixed deposits, loan accounts, etc. with the new bank. So, depositors and borrowers will have to keep a track of such communications and respond to them appropriately. Also, depositors and borrowers need to check if there has been any revision in the interest rates on deposits or loans.

Most importantly, if the accountholders of these banks use their accounts for online transactions, they need to change their account number and related details (such as IFSC code) and update them wherever they use it. Of course, the new entity will give 

opportunity to the customers to update their details within a stipulated time. Also, the separate websites of these banks may cease to exist and customers may be redirected to the merged entity’s website. Some of the bank branches of the three banks may be closed to avoid overlapping, while some of the ATMs may be relocated or closed.