In a transfer that might pave the best way for mergers within the public-sector banks (PSB) area, the federal government has requested banks to share the advantages of mergers which have occurred until date.
“The government has sought data on internal assessment by banks regarding impact of amalgamation on various stakeholders that includes employees, customers and operational efficiency,” Sunil Mehta, chief govt of Indian Banks’ Association, who was earlier chairman of Punjab National Bank, informed The Indian Express.
“The process of amalgamation of banks is over and now is the time to reap benefits from this. The benefits can be huge in terms of rationalising the number of branches and using IT for Digital banking — all this will ultimately lead to reduction in cost of operations and add to profitability and customer convenience,” Mehta added.
Banks are almost certainly to supply knowledge on it this week and the transfer might pave the best way for additional consolidation of banks within the nation, hinted sources within the know.
“The government’s strategy on banks is two-pronged — one is to privatise banks and the other is to merge banks to make them financially stronger. This move could be a signal towards more consolidation in the banking space,” mentioned a supply on a situation of anonymity.
As a part of its technique to make banks larger and financially stronger, the federal government in 2019, introduced a merger of 10 public sector banks to 4 — the variety of PSU banks have been lowered from 27 to 12.
As a part of the merger, Corporation Bank and Andhra Banks had been merged with Union Bank of India, Syndicate Bank was merged with Canara Bank, Oriental Bank of Commerce and United Bank of India had been merged with Punjab National Bank and Allahabad Bank was merged with Indian Bank.
These mergers grew to become operational from April 2020 after the merger of Dena Bank and Vijaya Bank with Bank of Baroda and of affiliate banks with State Bank of India.
The consolidation technique of the federal government is with an intention to amplify banks that may compete with not simply Indian non-public banks but additionally banks globally. Post the mergers until date, SBI has the very best market share amongst all banks at 22 per cent and PNB’s — second largest public-sector financial institution — market share is about 8 per cent.
As a part of its privatisation technique, the federal government is seeking to privatise two banks that embody Mumbai-headquartered Central Bank of India and Bank of India that haven’t been merged with any financial institution but.
