The possible merger of some public sector banks gained currency after a government document, shared on micro-blogging platform X (formerly Twitter), stated a meeting next month between a Lok Sabha panel and four state-owned lenders.

Speculation grew that Union Bank of India and UCO Bank would merge while the other combination would be between Bank of Maharashtra and Bank of India.

The agenda listed in the document was a discussion on the regulatory mechanism in a ‘post-merger’ scenario.

The Union finance ministry later revised the agenda of the parliamentary committee meeting, omitting the ‘post-merger’ mention. This revised version of the document also started circulating on X.

As per the first document, the Lok Sabha panel would meet the four PSU banks and the Reserve Bank of India (RBI) next month to study various rules including the ones on mergers and acquisitions (M&A). 

The letter dated 14 December stated that the Committee on Subordinate Legislation, Lok Sabha, will visit Mumbai and Goa from January 2-6 for meetings with representatives of Union Bank of India, UCO Bank as well as officials from Bank of Maharashtra and Bank of India.

The document said the committee is undertaking an "on the spot" study visit to Mumbai and Goa in connection with “examination of rules, regulations, bye-laws...under various Central Legislations as being implemented by the various Central Government Ministries/departments/Organisations, CPSUs, banks at these places’’.

During their stay, the document said, the panel will hold informal meetings with the representatives of Union Bank of India and UCO Bank on rules/regulations framed under the Banking Regulation Act, 1949 and other relevant Acts as applicable to them and the ``regulatory mechanism in a post-merger scenario’’.

It would hold similar meetings with representatives from the Bank of Maharashtra and the Bank of India.

The document, being circulated on X, is a government PDF issued in the name of Ramesh Yadav, Under Secretary of the Government of India. The letter is issued to the Governor, Reserve Bank of India, Chairman of LIC, IRDAI, and NABARD, along with MD and CEOs of UCO Bank, Bank of Maharashtra, Bank of India, and Union Bank of India.

The PDF is also addressed to CMDs of New India Assurance Company, United India Insurance Company, Oriental Insurance Company, National Insurance Company, and MD & CEO of SBI Life Insurance Company. 

This circulation of the document on X led to speculations that there could be a merger of these four lenders, with Union Bank of India consummating Kolkata-based UCO Bank, like it had earlier merged Andhra Bank and Corporation Bank with itself. This buzz, however, got diluted when the ministry dropped the word ‘merger’ from the letter.

The revised agenda, however, said the committee will meet these banks to discuss rules framed under the Banking Regulation Act, 1949 and other Acts as applicable to them.

The committee will also meet officials of the RBI to discuss the RBI Act, of 1934.

They will also engage with representatives of the Insurance Regulatory and Development Authority of India, Life Insurance Corporation of India, SBI Life Insurance, Oriental Insurance Company, United India Insurance Company and New India Assurance Company to discuss various rules prevailing under the LIC Act, 1956, Insurance Act, 1938 and the General Insurance Business (Nationalisation) Act, 1972.

On 1 April 2020, 10 PSU banks merged to become four banks. While Syndicate Bank merged with Canara Bank, Allahabad Bank combined with Indian Bank. Andhra Bank and Corporation Bank came under the wings of Union Bank of India. Oriental Bank of Commerce and United Bank of India merged with Punjab National Bank.

A year earlier, Vijaya Bank and Dena Bank merged with Bank of Baroda.

Earlier, in 2017, five associate banks and Bharatiya Mahila Bank were merged with State Bank of India (SBI).

India currently has 12 PSU banks, down from 27 in 2017.