A major decision was announced by Finance Minister Nirmala Sitharaman on Friday. Ten public sector banks are proposed to be merged into four, based on their regional, technological and other similarities for smoother mergers. The government in its release said that the consolidation will unlock the potential of these entities as bigger banks who have enhanced capacity with higher credit and risk appetite.

The Finance Ministry decided to bring down the total number of public sector banks from a total of 27 to 12 rather than follow its earlier practice of repeated capital infusion in ailing financial bodies.

The government also released details on how the 4 mergers will work out:

1. PNB + OBC + United Bank

After Oriental Bank of Commerce and United Bank are merged with Punjab National Bank, the combined entity will become the country's second-largest public sector bank with a total business of Rs 18 lakh crore.

2. Union + Andhra + Corporation Bank

The consolidated bank structure will become the fifth-largest public sector bank in India with a business of Rs 14.6 lakh crore and the fourth largest branch network in the country.

3. Canara + Syndicate Bank

The Karnataka-based banks will combine to form the fourth-largest public sector bank in terms of business at Rs 15.2 lakh crore and third-largest bank in terms of the branch network.

4. Indian + Allahabad Bank

The combined entity will be the seventh-largest public sector bank in the country with Rs 8.08 lakh crore business.