Merging of banks: Reform or damage control measure?
The merging of banks is in news in the recent days. The government is calling it a reform of banking sector. This could be one of the many blunders that the government could be making in order to cover up for the many blunders to bail out the banks that have suffered many setbacks with economic burden of bad loans. Demonetisation was another massive blooper that way and the country is still paying for that mistake.
Three major public sector banks of the country – Bank of Baroda, Vijaya Bank and Dena Bank would be merged to make good for the bad loans given out to companies. This is being projected as a ‘reform’ which is not the case. But if the centre thinks this step will help the banks get better, it is nothing more than a pipe dream. In the recent times Bank of Baroda had reached some healthy space fiscally due to its decisions. But that process will now hit a roadblock.
Finance minister Arun Jaitley has been giving statements to bank employees that the government is trying to protect the interest of all banks with this step. No employee will probably face an unsavoury situation regarding his/her work owing to this merger. In the past, the subsidiaries of State Bank of India had merged to form a single identity. But the employees had complained of their professional life being affected by that merger. They have said they face discrimination before the SBI main employees. Their promotions and increments have been badly affected.
Decisions relating to public sector banks have caused a deep damage to the economy. Public sector banks comprise 2/3rd of the banking sector in the country. Non-recoverable loans and non-performing assets are major problems that cannot be solved easily. Their illness has become quite a bit of a deterrent in making the economy any better. New loans are hard to come by. Jaitley has been saying merger of banks is the only solution to all this.
It’s an old news that big banks gave massive loans to mega corporate companies that turned into a huge bungle. The banks will now have to take corrective measures before doling out loans to big companies here after. Many bank managers are undergoing mental torture owing to investigations that are in progress on having facilitated loans for big players of corporate companies. A few reconciliatory measures have to be initiated to bring back the confidence among bank managers in this regard.
It would be downright unwise to merge a few public sector banks and create conducive atmosphere for the government in its economic affairs. The government does not have a proper response to the question that raises concerns about merging small banks to create a bigger bank. Any organization that turns big, also brings big problem with it. If that fails in that form in the future, the problem it leaves behind is also big enough to tackle.
Today the government has to work on sorting out the mess. A team of managers has to be built who can work without political interference to help find a solution to this issue. Political pressure on bank managers is a common thing that’s known to all. Some higher level managers would be speaking for bigger power houses within their banks all the time. They hesitate to initiate action when the defaulters are big industrialists or entrepreneurs. This has turned into a bigger menace for public sector banks. The step to merge banks to tackle this crisis, thus hoping to lift the banks from quagmire, is another disaster in the making. The government should know danger lies right ahead of this decision.
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India moving towards becoming global economic powerhouse: Kovind
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Amritsar (PTI): Former president Ram Nath Kovind on Friday said that with digital transformation, economic reforms and a strong focus on the ease of doing business, India is moving towards becoming a global economic powerhouse.
He was speaking after inaugurating the 19th edition of the Punjab International Trade Expo (PITEX) in Amritsar.
The former president said that this 19th edition of PITEX is being organised at a time when India is recognised as one of the fastest-growing large economies in the world.
Speaking at the inaugural ceremony of the event organised by the PHD Chamber of Commerce and Industry (PHDCCI) the former president, while referring to Punjab, said the state is a living example of courage, sacrifice and enterprise.
"The spiritual light of Sri Harmandir Sahib (Golden Temple) inspires peace and humanity across the world. The heritage of Punjab is deep and inspiring," Kovind said, according to a statement issued by the PITEX.
The former president congratulated the PHDCCI for hosting the 19th edition of PITEX and suggested that the chamber should expand PITEX outside Punjab.
He proposed that a similar event should also be held in New Delhi.
