Mega Bank Mergers: Handle with care
M G Warrier
September 9, 2019
Handle with care
Tamal Bandyopadyay’s insightful article “Bravo FM, but it’s only half the job done” (Business Standard, Banker’s Trust, September 9) gives a realistic recap of the progress of banking sector in India post-nationalization and gives practical suggestions for making the current phase of banking consolidation purposeful.
Perhaps, India may be the only country which has deployed the resources and outreach of banks as an effective tool in the nation’s economic development with focus on financial inclusion with insight and foresight continuously for half a century. It goes to the credit of GOI as owner of public sector banks and RBI as the regulator and supervisor of the banking system that whatever has been achieved by financial intermediation across the sectors was without much damage to the institutional system. This was made possible by timely intervention to restructure and reorganize the banking infrastructure, by reorganization of existing institutions and introducing new players where necessary. Viewed in this perspective, the present merger of 10 PSBs to form 4 is a continuation of such efforts.
So long as banks continue to mobilize resources using the public deposit route, they will not be able to get away from the responsibility to provide need-based banking services including lending to priority sectors. GOI and RBI will have to ensure that all banks get a level playing field to manage their business professionally. From this angle, not only banks, but all statutory bodies and PSUs need a free hand, subject only to transparent regulatory mandates, to manage their resources, personnel and day-to-day administration.
M G Warrier, Mumbai