The board of Punjab National Bank (PNB) on Thursday gave an "in-principle approval" to its merger with Oriental Bank of Commerce (OBC) and United Bank of India (UBI).
The board also approved the Rs 18,000 crore capital infusion, as announced by the government last week.
On Wednesday, Moody' Investors Service updated its outlook on the PNB to positive from stable.
Centrum Broking said, "Consolidation has generally been near-term detrimental to the stronger (acquiring) banks and an extended integration period remains a challenge."
Shares in PNB ended 2 per cent higher at Rs 61.10 on the NSE.
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