oppn parties Breaking: Will There Be Mega-Mergers Of PSU Banks In A Couple Of Days?

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  • Mamata Banerjee says her party will not join Modi's oath-taking ceremony. Also says INDIA bloc might stake claim to form government later
  • K C Tyagi of the JD(U) dropped a bombshell when he said that Nitish Kumar was offered the post of prime minister for switching sides. Opposition leaders rubbished the claim
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  • T20 WC: India take on Pakistan today. Telecast to begin at 8pm IST
  • T20 WC: Afghanistan stun New Zealand and Bangladesh win against Sri Lanka
  • T20 World Cup: Australia beat England by 36 runs. This spoils England's chances of making the playoffs as they have lost both their matches till now
  • Heat wave continues in the country as monsoon moves slow
G7 commits to promote India-Europe corridor
oppn parties
Breaking: Will There Be Mega-Mergers Of PSU Banks In A Couple Of Days?

By Sunil Garodia

About the Author

Sunil Garodia Editor-in-Chief of indiacommentary.com. Current Affairs analyst and political commentator.

A freelance journalist and researcher, Pratim Ranjan Bose (@pratimbose), has tweeted that all PSU bank officers have been asked by the government to remain available for duty on Saturday, 10th August and Sunday, 11th August. This, he says, points to a major disruption in the banking sector. He says there might be a merger of PSU banks to create 4 or 5 mega entities on the lines of China. He also reports that the PSU bank chiefs are having a meeting with the Department of Financial Services under the Finance Ministry, after having met Finance Minister Nirmala Sitharaman a couple of days ago. He also reports that tests have been carried out to synchronize the core banking CBS systems of which there are two kinds in use. The SBI and some other banks use TCS developed BaNCS while the Bank of Baroda and some others use Finacle developed by Infosys.

If this report turns out to be true and a major disruption in the form of mega-mergers is carried out, the government would have made its first big move in the financial services sector. Indian PSU banks have eroded most of their capital due to bad loans. The funds needed for recapitalization are huge and unavailable. Hence, merging them to form big entities will solve many problems, provided economies of scale are availed, multiple branches are closed down and staff strength whittled down to the optimum required. These banks will be able to compete with their global peers and not shy away from global deals. If the banking system is cleaned and if banks start lending again, the economy might yet recover from the debilitating state it is in now.