Allahabad Bank Merger: Which Bank Took Over?

• by Seraphina Durand
• Sep 30, 2025
• 0 Comments

Allahabad Bank Merger: Which Bank Took Over?

When the headlines announced the Allahabad Bank merger, most people wondered which institution would absorb the historic lender. The answer is Indian Bank, a fellow public sector bank that completed the merger on April 1, 2020. Below you’ll find everything you need to know - from why the move happened to how it affects your accounts today.

Quick Facts

• Merger date: 1April2020
• Acquiring bank: Indian Bank - a government‑owned commercial bank headquartered in Chennai.
• All Allahabad Bank branches were rebranded under Indian Bank within six months.
• Regulatory approval came from the Reserve Bank of India and the Ministry of Finance.
• Shareholders received Indian Bank shares on a 1:4.5 swap ratio.

Background of Allahabad Bank

Allahabad Bank was established in 1865, making it one of India’s oldest banks. It grew to over 2,300 branches across 20 states, serving retail, corporate, and agricultural customers. The bank’s core strengths lay in its extensive rural network and a loyal customer base in the north‑central region.

Despite its legacy, the bank faced mounting pressure after the 2008 financial crisis. Non‑performing assets rose to 13.5% by 2017, and capital adequacy slipped below the RBI‑mandated 9% threshold. The Government of India, which owned 100% of the bank, began exploring consolidation options to restore stability.

About Indian Bank - The Acquirer

Indian Bank began operations in 1907 and now operates more than 5,000 branches nationwide. It enjoys a healthier balance sheet, with a capital adequacy ratio of 13.2% in FY2019‑20 and a diversified loan portfolio that balances corporate and retail exposure.

Indian Bank’s management team had already overseen two smaller mergers (with Bank of Baroda’s North‑East Circle and with United Bank of India), giving it proven experience in integrating systems and cultures.

Merger Timeline and Regulatory Approvals

1. June2019 - The Ministry of Finance announced a plan to consolidate five public sector banks, including Allahabad Bank and Indian Bank.
2. October2019 - Indian Bank’s board approved the merger proposal after due‑diligence.
3. December2019 - The Reserve Bank of India (RBI) granted a No‑Objection Certificate, confirming compliance with capital and liquidity norms.
4. January2020 - Shareholders of both banks voted in favor of the merger at their respective Annual General Meetings.
5. March2020 - The Government issued a Gazette Notification, making the merger official.
6. 1April2020 - The merger became effective. All Allahabad Bank accounts, loans, and credit cards were transferred to Indian Bank.

The timeline reflects a swift process, driven by the government’s urgency to strengthen the public sector banking sector.

Why the Merger Made Sense

Three main factors guided the decision:

• Capital adequacy: Combining the banks boosted the merged entity’s capital base to over₹18,000crore, well above the RBI’s requirement.
• Operational efficiency: Overlapping branches in Uttar Pradesh and Madhya Pradesh could be rationalized, reducing costs by an estimated₹1,200crore over five years.
• Customer reach: Indian Bank’s larger digital platform allowed former Allahabad Bank customers to access advanced mobile banking, UPI, and contact‑less services.

The move also aligned with the broader Banking Consolidation drive championed by the Ministry of Finance and the Reserve Bank of India to create stronger, more resilient public sector banks.

Impact on Customers and Employees

For customers, the transition was largely seamless. Existing ATM cards continued to work, and branch signage changed within weeks. Indian Bank migrated all core banking data to its Finacle platform, which meant faster processing times for deposits, withdrawals, and loan approvals.

Employees faced a restructuring phase. Approximately 2,500 Allahabad Bank staff were absorbed into Indian Bank, while around 300 positions were rationalized. The government provided a one‑time severance package and retraining programs for those reassigned.

Financial and Regulatory Highlights

Key financial outcomes post‑merger:

• Combined net profit for FY2020‑21: ₹4,240crore, a 15% increase over Indian Bank’s standalone figure.
• Non‑performing assets (NPA) ratio fell to 8.9% thanks to diversified loan portfolios.
• Capital adequacy ratio rose to 13.8%.

The RBI monitored the integration closely, issuing periodic compliance reports that confirmed the merged entity met all prudential norms.

What You Need to Do Today

If you still hold an Allahabad Bank account, here’s a quick checklist:

1. Check your online banking portal - it should now display the Indian Bank logo.
2. Verify your debit/ATM card - if you received a new card, activate it within 30days.
3. Update auto‑pay details for utility bills, loan EMIs, and subscriptions.
4. Visit the nearest branch if you notice any discrepancy - all former Allahabad Bank branches now operate under Indian Bank’s policies.

There’s no need to close the account unless you prefer moving to another bank. Indian Bank offers enhanced interest rates on savings accounts and a broader range of credit products.

Future Outlook for the Merged Bank

Analysts expect the combined entity to focus on digital expansion, especially in Tier‑2 and Tier‑3 cities. Indian Bank has announced a ₹2,500‑crore investment in fintech partnerships and AI‑driven credit scoring, which should benefit former Allahabad Bank customers.

Regulators continue to push for further consolidation, but the next wave is likely to involve smaller regional banks rather than large public sector players.