The initial stages of the merger process between Union Bank of India and Bank of India (BoI) appear to be underway, according to sources familiar with the matter. Both banks are reportedly conducting due diligence, including detailed internal assessments of operational processes and integration strategies. Some officials have indicated that the merger could be completed by the end of this calendar year.
“The government is keen to merge smaller banks with larger ones to create four to five big PSU banks instead of the current 12,” said a senior banking official familiar with the developments, speaking on condition of anonymity.
Once finalized, the merger is expected to create one of the country’s largest public sector lenders, with a significantly expanded balance sheet, branch network, and customer base. The combined entity would become the second-largest PSU bank in India, with projected assets of approximately ₹25.4 lakh crore in FY25, and the third-largest bank overall, following State Bank of India and HDFC Bank.
In terms of market capitalisation, the merged bank would rank sixth at around ₹2.13 lakh crore at current prices, surpassing Bank of Baroda, Canara Bank, and Punjab National Bank. Currently, Union Bank and Bank of India are the fifth- and sixth-largest PSU banks, respectively.
One of the key challenges in executing the merger will be integrating the banks’ technology platforms, given differences in core banking systems and digital architectures. Queries sent to both banks regarding the integration remained unanswered at the time of publication.
Both Union Bank and BoI have shown steady improvements in asset quality and profitability over recent quarters, aided by lower non-performing assets, recoveries from stressed accounts, and strengthened capital buffers. These factors may support a smoother transition and integration once the merger is completed.
The merger is part of the government’s broader strategy to consolidate public sector banks, creating fewer but larger and more competitive institutions in the financial sector.
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