State-owned lender Punjab National Bank (PNB) has received in-principle approval from the government for the proposed three-way merger with Oriental Bank of Commerce and United Bank of India.
In a regulatory filing, the bank said that it has received a letter from the Department of Financial Services, Ministry of Finance, clearing the proposed amalgamation.
The move comes more than two months after the government of India announced a mega-merger plan to combine 10 state-owned lenders into four entities.
The move is aimed at strengthening the sector and supporting the government’s plans to convert India into a $5 trillion economy in the next five years.
As part of the plan, Oriental Bank of Commerce and United Bank of India will merge into PNB. The combination will create the second largest public sector bank in the country.
This week, the government also granted in-principle approval to Union Bank of India for its proposed merger with Andhra Bank and Corporation Bank. This three-way merger was also announced in September.
In recent years, the Indian government carried out several consolidations to clean up the banking sector.
In April, Dena Bank and Vijaya Bank merged into Bank of Baroda, creating the third largest bank in the country.
The government also merged State Bank of India (SBI) with its five associate banks.