9,580.3090.2
Stock Analysis, IPO, Mutual Funds, Bonds & More

Mega PSU bank mergers come into effect from April 1. 5 things a bank customer should know

You would have given your bank account numbers and IFSC codes for various financial transactions. Unless these accounts are seamlessly merged into the financial system of the anchor bank, you would be required to change the details of your bank account.

ET Online|
Last Updated: Apr 01, 2020, 11.09 AM IST
0Comments
Getty Images
bank-merger-getty
ET Calculator Banner
Last year in August, finance minister, Nirmala Sitharaman had announced the consolidation of 10 public sector (PSU) banks into four mega state-owned ones. These banks will be amalgamated to four mega PSU banks will come into effect tomorrow, i.e., April 1.

Banks getting merged
In a merger, there is an anchor bank and an amalgamating bank or banks, where the latter gets merged with the former. For instance, in the consolidation that happened in April of 2019, Vijaya Bank and Dena Bank (amalgamating banks) were merged into Bank of Baroda (the anchor bank). In effect, the operations of Vijaya Bank and Dena Bank were handed over to Bank of Baroda. Essentially, retail customers of the amalgamating banks are likely to get directly affected whereas customers of the anchor bank are not likely to face much change. However, shareholders of all banks involved in the mergers are bound to be impacted.

Here is a look at the banks involved in the consolidation on April 1.

Now, bank customers including account holders of amalgamating banks are likely to get affected. Here is a look at how bank customers will be impacted.

Bank account number, customer IDs to change
According to the FAQs on the amalgamation of UBI and OBC with PNB, "The existing Account No., IFSC, MICR, Debit Card etc. will continue post amalgamation, until further notification. Your existing account in all three amalgamating banks will continue with all its services."

On a later date, you are likely to get a new account number and customer ID. For instance, a couple of years ago, when five associate banks of State Bank of India (SBI) were merged, IFSC codes and names of 1,300 branches were changed. The banking behemoth changed the names and IFSC codes of branches of the amalgamating banks located in major cities such as Mumbai, New Delhi, Bengaluru, Chennai, Hyderabad, Kolkata and Lucknow.

Account details for auto-credits/debits
You would have given your bank account numbers and IFSC codes for various financial transactions - auto credit of dividends via ECS, auto-credit of salary, auto debit of various bills/charges etc. Unless these accounts are seamlessly merged into the financial system of the anchor bank, you would be required to change the details of your bank account given for these purposes.

According to the FAQs of the OBC, UBI and PNB merger, "All ECS/NACH arrangements/standing instructions for utility payments, Loan EMIs, RD Instalments, Credit Card payments and other services shall function without any disruption to the customer. There is no need to resubmit your mandate."

Local branches and ATMs
Customers will now have access to a larger number of branches and ATM network and next generation banking technology. However, do keep in mind that branch rationalisation will happen. For instance, your existing home branch could shut shop if the new acquiring entity has its own branch in the same vicinity.

According to the above mentioned FAQs, "There shall be no immediate branch closures in any of the Banks. In future, if there are some closely located branches of the three Banks, they may be merged/shifted with prior notice to our esteemed customers." Keep an eye on the new IFSC and MICR code applicable to your branch and account since you will have to quote it for funds transfer and other financial transactions.

Fixed deposit and recurring deposit rates
The current rate of interest for existing RD/FD will continue till maturity. For FD, renewal will be done with the latest term deposit rates of the amalgamated bank.

Credit and debit cards
Your existing credit card will be valid until the date of expiry printed on the credit card and then it will be renewed on its expiry. You can also approach amalgamating bank for a fresh credit card.

With regards to debit cards, customers will not be charged a fee. For instance, the customers Allahabad Bank and Indian Bank can use their debit cards in the ATMs of both banks without any charges.

Also Read

PSU bank mergers: The sting of the scorpion

View: PSU bank mergers road to somewhere, but not reforms

PSU bank mergers: Is it actually good news for shareholders?

Tech, HR integration remain key challenges for PSU bank mergers

Comments
Add Your Comments
Commenting feature is disabled in your country/region.

Other useful Links


Copyright © 2020 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service