Addressing a press conference earlier in the day, Sitharaman had said "After this decision, the total number of PSBs will come down to 12 from 24 banks."
Apart from this, the government announced Rs 55,250 crore upfront as capital infusion in the PSBs.
"In 2017, where there were 27 PSBs. There are now only 12 PSBs operating to target the 5 trillion dollar economy," she said.
Sitharaman said the Punjab National Bank, Oriental Bank of Commerce and United Bank will be merged into one entity to make the second-largest PSB with a business of Rs 17.95 lakh crore and 11,437 branches.
Canara Bank and Syndicate Bank will be merged to become fourth-largest PSB with a business of Rs 15.2 lakh crore. Union Bank of India, Andhra Bank and Corporation Bank will become fifth largest PSB while Indian Bank will merge with Allahabad Bank to become seventh-largest PSB with the business of Rs 8.08 lakh crore.
Bank of India and Central Bank of India will continue as individual entities. Indian Overseas Bank, UCO Bank, Bank of Maharashtra and Punjab and Sindh Bank will also continue to operate on their own.