The merger was okayed at the Board of Directors meeting of the bank held today.
"The Board of Directors of the bank in its meeting held today, accorded in-principle approval for merger of its wholly owned subsidiary AllBank Finance with the bank," Allahabad Bank said in a regulatory filing.
The merger is subject to regulatory approvals, it added.
AllBank Finance is the merchant banking arm of Allahabad Bank and also holds licence for debenture trusteeship.
As a Category I Merchant Banker, ABFL offers basket of fee-based financial services such as IPO management, debt/loan syndication, trusteeship services (debenture trustee/security trusty) structured finance, placement of equity shares to qualified institutional buyers (QIBs), investment advisory and portfolio management services.