Big Bank Theory: Merger of SBI, associates cleared

Big Bank Theory: Merger of SBI, associates cleared: Cabinet also okays contracts under oil field policy...

February 16, 2017
Banking sector reforms
This refers to the report “Big Bank Theory: Merger of SBI, associates cleared” (Business Line, February 16). While the move is most welcome, the sporadic approach to financial sector reforms resurfaces, as GOI and RBI once again refused to even initiate the long overdue measures to consolidate and revamp the banking infrastructure in India. Inefficiency is built-in in the Indian Banking System, mainly because of structural and HRMD reasons.
The Financial Sector Reforms Committee (Narasimham Committee I, 1991) had visualized a structure for Indian banking System with “three or four large banks that could become international in character; eight to ten banks with a network of branches throughout the country engaged in ‘universal banking’; local banks whose operation would be generally confined to a specific region and rural banks (including RRBs) whose operations would be confined to the rural areas and whose business would be predominantly engaged in financing of agriculture and allied activities’. This is an idea whose time has come.
Perhaps, merger of associate banks with SBI could be followed by appropriate mergers at various levels of banks or branches of public sector and private sector banks, keeping in view also the prspective role of new players like small banks, payment banks and Postal Bank now going to position within the system. Once again, we remember with regret the opportunity the Financial Sector Legislative Reforms Commission missed, to go into these aspects, in its anxiety to discipline the regulators and supervisors including RBI which were doing their job fairly well.

M G Warrier, Mumbai 


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