The last few weeks have been noisy: a splashy headline about a possible “second round” of PSB consolidation lit the rumor mill, and social media quickly turned vacancies and personnel moves into proof of a secret merger plan. But the picture is more nuanced — and the noise risks drowning out the real, technical conversation that PSB Manthan and FIBAC brought to the table.
Yes, an Economic Times piece flagged consolidation as a topic under discussion — that set off speculation. Yet, senior officials at PSB Manthan made a clear point: consolidation was not on the agenda in that forum, and the public messaging since has emphasised organic scale, governance and technology as the priorities.
Take the Union Bank MD vacancy. Conspiracy theorists made it the poster child and suggest leaders keep the post empty to ease a future merger. That’s a neat story, but it doesn’t stand up to routine bureaucratic practice. The DFS and government have, yesterday, used tenure extensions to ensure continuity at PSBs rather than to mask imminent M&A. Facts about tenure extensions and the appointment pipeline suggest management continuity is the more likely explanation, not a secret consolidation plan.
If the real issue is not mergers, then what are government & regulators actually talking about?
The answer came loud and clear at FIBAC and PSB Manthan: AI, digital maturity and rebuilding productivity. The FIBAC 2025 report shows AI / GenAI (Artificial Intelligence) as a transformational lever, but it also highlights a stubborn reality — until recently banks were spending the bulk of their IT budget on “running the bank.” In FY23 roughly 75–80% of IT spend went to maintenance and infrastructure, leaving only about 20–25% for true innovation; FY25 shows some improvement but the message is clear: the innovation runway is limited. That matters because pushing AI without adequate investment, governance and change management would be premature.
This is why the AI debate needs to be more than a technology show: regulators have produced frameworks (the RBI’s FREE-AI committee work), and All India Bank Officers Confederation (AIBOC) have formally cautioned against a unilateral, top-down rollout without social dialogue, safeguards and reskilling plans. Those are serious, practical concerns — about bias, accountability, job redesign, credit allocation and the risk of leaving vulnerable customers behind.
So where does that leave us? The consolidated takeaway is simple and urgent: don’t confuse headline speculation with policy signal. The merger whispers — including the idea that vacancies are engineered to enable consolidation — look increasingly like conjecture. The real, consequential conversation is about how PSBs will responsibly adopt Artificial Intelligence (AI), reshape operating models, protect workers’ rights, and ensure credit and inclusion outcomes improve rather than shrink. That requires transparency from regulators, structured social dialogue with unions and staff, clear governance standards, and patient investment in innovation — not rushed decisions.
“If PSBs are to be engines for Viksit Bharat 2047, let the focus be on building scale through productivity and responsible tech adoption”
