Considering the encouraging response of the previous essay contest here is the Part 2 of the contest.
Last day: 25/7/2016 (Midnight)
1)The bane of NPA's in the country
2)Mergers and Indian Banks
3) Benefits of Yoga
4)Future of Banking Industry
5)write a letter to the Branch Manager seeking overdraft facility
P.S: The best essays of the previous contest will be published tonight(i.e on 24/7/2016)
Last day: 25/7/2016 (Midnight)
1)The bane of NPA's in the country
2)Mergers and Indian Banks
3) Benefits of Yoga
4)Future of Banking Industry
5)write a letter to the Branch Manager seeking overdraft facility
P.S: The best essays of the previous contest will be published tonight(i.e on 24/7/2016)
The government has decided to push for the creation of a new banking giant by merging the State Bank of India with its associate banks. The merger move comes at a time when the most important issue facing Indian banks—and the Indian economy—is the growing pile of bad loans with the banking system.
ReplyDeleteRight from the Narasimham committee on bank consolidation, many companies have recommended the consolidation of public sector banks. Though this has been attempted on a small scale in the past, the upcoming merger will increase bank’s balance sheet and the consolidated entity would be better placed to serve the growing banking needs of the country as it would be easier to implement government schemes like PMJDY, DBT etc via a single bank than via many. It will also lead to reduction in operation cost and banks will be able to fund bigger infrastructure projects. It will make banks efficient in meeting stringent Basel 3 norms. Merger will help in diversifying risk management. Synergy of operations and scale of economy in the new entity will result in savings and higher profits for the customers.
Though the merger has been mooted, there have been some apprehensions to doing it now because it is feared that weak banks will drag down the strong parent. There is clear mismatch between balance sheets of SBI and the associates. Workers unions could be a big impediment towards consolidation.
Integrated approach by all stakeholders is the need of the hour. There is a need to study failure of giants before implementing the same to banks like SBI which are systematically important banks for India and too big too fail , at the same time basic needs of last mile connectivity should not be compromised.