"We shall continue with two banks, which will have national presence—Bank of India with Rs9.3 lakh crore of business size and Central Bank of India with Rs4.68 lakh crore of business size," the minister says.
Indian Overseas Bank (IOB), UCO Bank, Bank of Maharashtra and Punjab and Sind Bank would continue to be independent lenders.
Explaining the rationale behind merger of OBS (Oriental Bank of Commerce) and United Bank with PNB, the minister says, all three lenders use same banking software, which will enable them to realise gains quickly. "The consolidated bank will have high current account saving account (CASA) ratio and lending capacity. The merger will led to higher cost reduction due to network overlaps. It will also save cost and provide more income opportunities for joint ventures and subsidiaries of these banks," she added.
The merger of Syndicate Bank with Canara Bank, Andhra Bank and Corporation Bank with Union Bank and Allahabad Bank with Indian Bank will also result in similar realisations.
In large banks the strength of executive directors is enhanced to four, Ms Sitharaman says adding, "Flexibility is being given to bank boards of large PSBs to enhance sitting fees of non-official directors (NODs). Bank boards are given mandate to reduce or rationalise board committees. In addition, MCB loan sanction thresholds is now enhanced by up to 100%."
Talking about employees in PSBs, the FM said, from now onwards, board committee of nationalised banks would appraise performance of top management from general managers (GMs) and above. PSBs would now recruit chief risk officer from market. Bank board would also decide a system of individual development plans for all senior executive positions.
All India Bank Employees' Association (AIBEA) General Secretary CH Venkatachalam said that bankers will hold massive demonstrations on Saturday all over the country and also wear black badges.
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Transformation leadership and effective HR issues resolution with cultural moorings hold the key for impending mergers and they are in cloud.
The elegant way in which the uncertainties about the report on RBI's Economic Capital Framework were thrashed out and the speed with which measures to accept and implement the report were initiated by RBI with active support from GOI gave a loud and clear message that adhocism and uncertainties are things of the past, in regard to management of India's central bank.
The announcement of merger and consolidation of major public sector banks almost on the lines recommended by Narasimham Committee I in 1991, gives one the comfort that Modi 2.0 is clear about government's intention to induce professionalism and economy of scale in condut of business by public sector banks.
Indian Banking System is nearer to the institutional structure recommended by the Committee on Financial System (Narasimham Committee, 1991), which visualized "3 or 4 large banks that could become international in character, 8 to 10 banks with a network of branches throughout the country doing universal banking and local banks confined to specific regions.
One expects, the consolidation will be smooth with the board and HR-related precautions spelt out by the Hon'ble FM, Nirmala Sitharaman while briefing the media about the mega mergers.
M G Warrier, Mumbai
banks. step is to downsize the psu banks. share of govt to be diluted in
due course. psu banks can be healthier in future and disinvestment will
be easy. staff strength/costs will reduce. provisioning will be less. no other way out!
it is long term step.
Why is no one addressing the job losses that will result as a result of the merger?- in a time when job creation is the need of the day .
Who will be responsible for the NPA recovery? It will become nobody's baby and the 'predecessors ' will be blamed as usual. They will have retired or be superannuated by then
Will the money 'received' from the RBI be used to recapitalise the banks and flow into the NBFC only to disappear again ?
We appeal to the Government , please, please get professionals to run the economy; the power point presentation of the ministry yesterday during the announcement did not inspire confidence
In contrast with your statement "bank employees' are overstrained with additional unrelated duties, like Adhar Registrations, canvassing Ponzi schemes, investment in Mutual Funds, & Election duties [MP/MLA/ZP/Mandal elections], etc." This problem is not confined to PSBs it can be seen in private sector banks also but gov. Employee thinks "i am a government servant and i am not ansrable to anyone" Which leads him to excessive bitterness. They are not bothered by work load but the reality is they don't want to work.
Further if someone is doing other work like Adhar registration (as you mentioned sir) i think they do that particular task at that time and don't indulge in other work so i don't think it increases any type of work load. (As private employees are managing all these things with lower salaries also and with no pension scheme)
Untill a gov. employee starts to think that he is ansrable to public things won't change sir.
Work will not be done with full potential unless it has purpose.
1. Already, the entire Indian economy is in a mess.
2. The final result of PSB mergers -
a. Closure of branches with more & more strain on existing staff.
b. No scope for branch expansions with any remedy for unemployment of teeming millions of qualified youth.
c. Entire NPAs of PSBs shall be kept under the carpet.
d. In the absence of refurbishment of PMO & UFM fully saturated by duds of ad-hocism, entire borrowed money US $.5 trillion shall vanish under the dispensation of merged PSBs.
e. The demand for bank services = sky is the limit. People utilize bank services for 24 hrs a day & 7 days a week. Mergers are a big mess.
3. Entire PSB scams involved apex level frauds committed by PSB boards, CMDs, EDs & CEOs. They are left scot-free.
4. With bank employees going on strike[s], tainted-PSB boards/CMDs engaged in Bank mergers, why the PM & UFM are taking such a risky step to strain the Indian economy vis-a-vis the citizenry, more so the youth.
5. Tinkering with Banking system ‘in crisis’ is an unwise step.
6. Every Indian citizen appeals to BJP/RSS cadres to counsel the decision-makers not to indulge in any more misadventures with failing Indian economy.
7. https://www.youtube.com/watch?v=T7fOf8rUrdw.
8. SATYAMAEVA JAYATHE!!!
1. How about recovery of mounting NPAs in erstwhile merged Banks?
2. Any plan[s] to fix-up wages + retirement benefits/pensions on par with leading foreign banks, so that the most talented Indian youth can join Banks?
3. How about refurbishing + registration with bye-laws of unregistered IBA/UFBU/CBPRO/AIBRF affiliates who played havoc with Bank employees’ wages + retirement benefits & accountability on RBI audit department & statutory auditors in preventing future frauds?
4. https://www.youtube.com/watch?v=T7fOf8rUrdw.
5. SATYAMAEVA JAYATHE!!!