This is the season of bank mergers. Punjab National Bank, Oriental Bank of Commerce and United Bank of India have merged to create the second largest lender in India. Canara Bank is merging with Syndicate Bank; Union Bank of India has merged with Andhra Bank and Corporation Bank and Indian Bank has merged with Allahabad Bank.
Now, there were 27 PSU Banks in India in 2017. After the merger there are only 12 PSU Banks in India. Way back in April 2017, SBI merged 5 of its associate banks with itself. We also had the merger of Bank of Baroda, Vijaya Bank and Dena Bank.
Now the big question? Do these mergers affect you as a customer? What are the things you must do to enjoy smooth banking if your bank has merged?
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Before dealing with this topic, let’s understand why banks merge. It’s for the customers and the economy. A bank merger is no cause for panic. Banks have arranged everything such that there’s minimum impact on customers.
Your money in the bank is safe, whether there’s a merger or not. Just take a look at the past mergers. When associate banks merged with SBI, customers faced no problems.
When bank board’s approve the merger, banks would make official announcements and all necessary procedures would be communicated to you through emails or letters. This would be for the transition of savings bank accounts, current accounts, locker facility, FDs and even loan accounts with the new bank.
Fraudsters are making use of bank mergers to cheat customers. Never share bank account details, internet banking PIN and ID with anyone. Beware of phishing and vishing.
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After a bank merger, your bank account number, customer ID and IFSC Code may change. If you have more than one bank account (This is with the merging banks), then two accounts will be allotted a single customer ID. KYC will not have to be updated as it has already been done. Just make sure mobile number and email ID have been updated with the bank. This helps as all official intimation on allotment of bank accounts comes to you instantly.
What if you have availed a car loan, personal loan or home loan? What about SIP in mutual funds? What about Income Tax Refunds? With a bank merger there are new bank account numbers, IFSC codes and customer IDs. You will have to update them with third-party entities like Income Tax Department for the IT refunds, mutual fund AMCs to get the redemption amounts and even life insurers to get the maturity amounts. Remember to submit fresh mandate forms for auto-debit of mutual fund investments and loan EMIs.
Make a list of all financial accounts like loans, mutual funds and life insurance plans. You can easily update them at the right time.
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Merging banks mean individual online banking portals cease to exist. You would have to visit the merged entity portal. Canara Bank has merged with Syndicate Bank. This means the merged entity has a new internet banking portal.
There are chances that you can continue with the older credentials (Existing User ID and Password) for online banking, depending on the bank.
When getting redirected to the new website, stay alert. Make sure you are logging to the right bank website for internet banking. Phishing webpages look similar to the new bank homepage.
Bank rationalization may take place after a merger. This is because the merged entity may have bank branches nearby. As bank branches may close there would be disruption of bank locker facilities. ATM outlets may be reshuffled. Check all communication from the bank vis-a-vis bank branches and ATM outlets.
Your existing debit cards and credit cards would be valid. Customers can access the ATMs of merged banks for free for all cash withdrawals, balance inquiries and so on. The merged banks issue new debit and credit cards.
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After bank merger is complete, understand the merged banks free and chargeable services. Get an idea on savings bank rates and FD rates. Understand loan rates on personal loans, home loans and car loans. Take a look at minimum balance to be maintained and average quarterly balance. These are charged as per banks rules and regulations.
Interest rates on all existing bank FDs and loans will not change after the merger. They will only be a transfer to the merged entity. Rates change only on renewal. All retail loans would be linked to the external benchmarks from October 1st 2019. The merged bank gives the option to shift to the new interest rate regime on renewal.
If you continue with MCLR (Marginal Cost of Funds Based Lending Rate), the loan gets linked to new bank rates on reset.
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