Merger of PSB a Curse for Indian Economy Save Banks Save Economy

Merger of PSB a Curse for Indian Economy Save Banks Save Economy

REPOST AGAIN FROM 15.03.2015

 MERGER OF BANKS

CANPAL A MOVEMENT TO PREVENT MERGER PROCESS OF BANK

Merger of PSB a Curse for Indian Economy

Save Banks Save Economy

Mission March 2020

Dear Friends In Pune Gyan Sangam Govt to India called all the Chief of the Public Sector bank and told them to be ready for the merger process not openly but the clear cut guidance have been given there itself to all the Chief of the banks. It is also important to remember that, despite nationalization, 600 million Indians remain un-banked and even the large numbers touted by the PM’s Jan-Dhan Yojana is just a drop in that ocean. There is no evidence that large, merged PSBs will reach out to a larger swathe of Indians, beyond the tokenism of opening no-frills accounts to please the government in power. Friends over 40 years of corruption and influence-peddling through PSBs are not going to vanish overnight, just because PM Modi has demanded accountability in return for operational freedom. Also, let’s not forget, that the PM has not promised full freedom or autonomy to PSBs. He has said that there will be “no political interference, but there could be political interventions for implementing programmes for rural housing and financial inclusion.”

Dear Friends a Lot of people are talking about merger of banks without taking their people or culture into account. Failure to assess cultural fit (not just financial fit) is one reason why many bank mergers ultimately fail. Throughout the merger and acquisition process, be sure to thoroughly communicate and double-check that employees are adapting to the change another important factor are my dear friends are execution risk is ,In some cases, banking executives don’t commit enough time and resources into bringing the two banking platforms together – and the resulting impact on their customers causes the newly merged bank to fail completely. While undergoing an M&A event at your bank, it’s critical that you pay attention to the impact it has on your customers. Especially with smaller community banks, customers often respond very emotionally to a bank acquisition – so it’s essential that you manage customer perception with regular, careful communication. And once the merger or acquisition is fully underway, remember to consider the impact on your customers at every stage: Anything from changing technology platforms to financial products could impact our customers negatively if we don’t pay attention. The rapid advances in computer and communication technology have led to the development of new bank services and financial instruments Therefore, the economies of world have experienced a revolutionary change in the Environment of banking sector. The competition among banks at domestic and Global level has increased and it has compelled the banking industry to improve their efficiency and productivity. Moreover, the government and policy makers have adopted various policies and measures out of which consolidation of banks emerged as one of the most preferable strategy. There are diverse ways to consolidate the banking industry the most commonly adopted by banks is merger. Merger of two weaker banks or merger of one healthy bank with one weak bank can be treated as the faster and less costly way to improve profitability than spurring internal growth .One of the major motive behind the mergers and acquisition in the banking industry is to achieve economies of scale and scope. This is because as the size increases the efficiency of the system also increases. Mergers also help in the diversifications of the products, which help to reduce the risk as well.
The issue of impact of mergers on the efficiency of banks has been well studied in the literature. Most of the literature related with the impact of mergers on the Efficiency of banks is found in European Countries and US. In India, literature on
Bank merger is very scarce. Very few studies have been conducted with the motive to examine the impact of mergers on the performance of Indian Commercial banks. Dear Friends Think both positive and negative impact before merger of banks. Our Senior Might Have seen the merger process but we are new to the banking world so whereas we think they will give their valuable guidance on this subjects.

Friends Where as I think a well managed PSB, more accountable CEOs, a board of directors that has no touts for politicians and industry, will ensure a substantial transformation, even without rushing to cut government holding of the banks. The issue of capital infusion to meet capital adequacy norms remains will never be arises and well-managed PSBs will give government a significantly higher valuation when it wants to dilute its holding.

However if the Law will be made against defaulters there will be no need for dilution of share holdings or capital requirements. According to our CBOA Beloved General Secretary Shri Mani Maran Sir if merger of banks happened it will affect the large Public Sector Banks for Funding the Large Projects. The merger and consolidation of large PSBs, if it ever happens, will further reduce the number of banks in the country and kill competition. This is bad for the consumer, because banks will operate even more like a cartel in that situation. We also need to mobilize public opinion on the circumstances in which having big banks, capable of funding large infrastructure projects, is in India’s interest.
According to our CBOA Think Tank Team frequently distributing the license forced the merger of the several banks. CBOA have seen since 1991 are a few bailout mergers forced on PSBs by RBI. These include the merger of Banaras State Bank and Memon Cooperative Bank with the Bank of Baroda; Nedungadi Bank with the Punjab National Bank; United Western Bank with IDBI Bank and Global trust Bank (GTB) with the Oriental Bank of Commerce.
Friends what happened to the private banks licensed in the early 1990s; many of them with extremely strange antecedents. Times Bank was the first to merge with HDFC Bank. Centurion Bank and Bank of Punjab—two other strange licences, first merged with each other and were, later, acquired by HDFC Bank. These do not including the shady CRB group (which had a provisional banking licence), which collapsed in the mid-1990s, and GTB which was bailed out post-2000. That apart, ICICI Bank took over Bank of Madura and Bank of Rajasthan, and Kotak Bank recently acquired ING Vysya. In effect, only a handful of new banks were licensed over the past 25 years but an equal number (from the old and new crop) have vanished.

As per Our Think Tank Team Suggestion Instead of giving new license to the banks RBI and Govt has to support and open More branches of the PSB so that PSB can More Participate in the Development of the Indian Economy.

CBOA JINDABAD

MANI MARAN SIR JINADABAD

Dileep Kumar PO Tiruvannamalai