The banking industry is amalgamating to help revamp the Indian banking system and to create a robust in the banking itself. The Indian government decided that this merger could be profitable if successful. In August 2019, the Indian Prime Minister, Mr. Narendra Modi, announced the merger of 10 Public Sector Banks into 4 with the help of the Finance Minister.
The problem began with the economic slowdown of the banking industry, and this consolidation can increase liquidity as well as combat the evasion of assets. Subsequently, the finance minister Nirmala Sitharaman announced 55,000 Crore INR of recapitalization after the merger started.
The merger between Syndicate Bank and Canara Bank
Today we are going to talk about Syndicate Bank, which merged with Canara Bank, and the profit it earned through this merger. The Indian Finance Minister declared the amalgamation took place when the board of the bank decided. Canara Bank got control over Syndicate Bank, with its shareholders receiving 158 equity shares on 1st April 2020. Although previously, the Canara Bank’s Board of Directors approved the merger on 13th September 2019 and also the Union Cabinet on 4th March 2020.
The Indian government approved this amalgamation to build it as a globally competitive lender. Now, after this amalgamation, Syndicate Bank became the 4th largest bank in India. This merger created an inclusive geographic footprint and obtained extraordinary success for the bank’s strength, size, and scale.
The Reasons Behind Syndicate Banks Merging
Likewise, other banks’ mergers, including the Syndicate Bank merger with Canara Bank, met all the expectations the government kept. This new bank business is worth Rs 15.20 lakh crore and is the third largest branch network with 10,342 branches in India. The newly created bank is named Canara Bank. Here are some reasons we are mentioning for the merger of these two banks.
- The government stated that the higher NPA bank takes over the banks with lower NPAs.
- Syndicate Bank’s operating metrics showed weak in terms of profits.
- To make an immense change in Syndicate bank’s economic system.
- To increase the credits, the big bank enhanced its capacity.
- This consolidation happened to unlatch the potential.
- Increase risk-taking.
- The operational efficiency gains to reduce the cost of lending.
- A strong existence represented the nation and reached out internationally.
- Betterment in Market resource gaining.
These reasons are initials to take the decision of merging whereas the merger took place by valid and crucial effects.
Amalgamation Changes That Customers Need to Know
Over the past few years, the merging system taking place in the banking industry, and customers need to know the exact plans occurring. Customers from the bank that Take Over need not worry about their account, but the customers from the bank that has gone under the Take Over need to consult about some changing facilities.
Though the business-as-usual in all branches for every customer, still further activities will be notified by emails or messages to the customer’s registered mobile number. As the consolidation already occurred, the customers became a part of a larger organization. The new establishment got immense market shares to increase the economic scales. Thus, customers are getting benefits out of this large amount of profits.
After the amalgamation, Canara Bank’s net profit rose 12.43% to Rs 383.04 crore on an 8.11% increase in the total amount of Rs 15,231.72 crore. Syndicate Bank’s shares rose 6.94% to Rs 32.35 and underperformed in the market when it fell 22.83% against Sensex’s 4.27% fall. This merger came up with all the fallen economic scalls to grow up to a higher level.