Bank Merger

The announcement to amalgamate major banks comes as a surprise as one understands that such a decision has been taken cautiously by the Ministry of Finance in recent years. The move for such a decision has been cited to infuse capital into the banks as the economy now is staring a gloomy picture in the markets. Through such a restructuring exercise to minimize bad loans and NPA mess apart from economic crisis, one will not be surprised if more such plans are implemented in future and set a trend with the concept of amalgamated Bank Merger system in the coming years.

It needs to be seen as to how quickly and effectively such an amalgamated banking entity will penetrate into businesses, citing common operational framework, as all the banks share a common banking software. It also needs to be seen as how well the Government, RBI and BBB will convince such a mammoth bank restructuring exercise to the end customers, the employees, the banking union etc., to move into such a new type of amalgamated banking entity.

In a bid to restructure and strengthen the banking system requirement, it should also be noted that the move may impact the already declining perception of the existing customers and other beneficiaries associated with the otherwise Indian traditional banking system in the recent years. An innovation needs to be implemented to ensure that the customers are moved to the new entity without much procedural hassles and ensure smooth transition of business into the newly-formed banks.

Varun Dambal,

Bangalore.

Also Read: Bank-merger move faces stiff opposition from employees