The government is working on an ambitious public-sector bank (PSB) consolidation blueprint that could reduce the number of state-owned lenders from 12 to just four in FY27 — with  State Bank of India (SBI), Punjab National Bank (PNB), Bank of Baroda (BoB) and a merged Canara–Union Bank structure emerging as the likely four — a government source said.

According to the source, the Centre is movings toward the merger of Canara Bank and Union Bank of India, a consolidation expected to form one of the four surviving entities. Indian Bank and UCO Bank are also being considered for integration into the same structure, creating another large bank that will join SBI, PNB and BoB as the remaining core lenders.