When recently 27 public sector banks merged including the Punjab National Bank, nearly every individual was worried about his savings and even fixed deposits with the public sector banks. As per the announcement made by Sethurathnam Ravi, the amalgamation scheme listed the merger of various popular banks like Indian Bank merged with Allahabad Bank, Canara Bank merged with Syndicate Bank, Oriental Bank of Commerce and the United Bank of India merged with Punjab National Bank, and lastly, Andhra Bank and Corporation Bank merged with Union Bank. The announcement of the merger came with a huge impact on the 308732 employees of the banks, 37492 domestic branches, 45448 ATM centers, and Rs. 3179304 crore deposits.
However, the impact of the merger is not only limited to all these. It is much more than the figures and facts that are mentioned in the papers. As per the BSE Chairman, these mergers come with a huge impact on the fixed deposit holders, savings account holders, employees, shareholders, borrowers, and the public. The primary aim of these mergers was to create large banks that are more capable of solving financial issues. Also, the merger was introduced to eradicate any kind of disparity between the small banks and large banks, cost savings from compliances and network overlaps, creating large middle management for selecting eligible candidates for the post of CGM, GMs, and DGMs for HR Department, IT department, and Risk management and much more. Overall, the mergers would improve the efficiency of restructuring and decision-making on high-leading banks.
Today, through this piece of information let’s talk about the impact of bank mergers as discussed by Sethurathnam Ravi with some quick points, making it easy to understand.
- Any kind of consolidation or merger makes dread among the partners, investors, and the representatives associated with the banks. The serious short-term issues can be taken out with the possibilities of long-term advantages given the consolidation process is consistently executed, with firm yet fine adjusting of partner interests. Also, Unions of the bank employees from different affiliations should be ensured that their skills are united for the development of the new element.
- The advantages of the mergers are just accomplished in the medium term to long term as the more grounded banks require critical time, endeavors, and assets to turn around the more fragile monetary records, execute the guide for adjusting HR and foundation like bank branches, bank products, ATMs, and so forth just as the reconciliation of Information Technology which is one of the greatest tests.
- Integration is something that seems to be too difficult when such mergers take place. As per the BSE Chairman, coordinating two organizations on various IT stages into a typical one is harder than setting up another bank as each bank has fostered an interesting framework by drawing in with various sellers, henceforth, making a substance that can flawlessly cover all parts of the financial business will consume most of the day.
- Another essential thought is to evaluate the lack or abundance of land and expand on an all-encompassing premise so they can be ideally utilized or arranged so inefficient resources are uncashed. Lastly, the banks with various principles and progressions to be welcomed in the total agreement are not meant for accomplishment.
So, when everything is considered like the assets and liabilities, culture, technology, etc., what do you think are the chances of success of any merger? To this, Sethurathnam Ravi answers that the success of any merger relies on the capability of managing the repercussion while supporting the changes. When the merger is used in the form of an unconnected initiative due to a lack of reinforcements that would weaken the primary aim of the merger that results in inefficiency.
As per the BSE Chairman, the collaboration of the strong bank changes should be completely determined to imbue restored good faith among Public Sector Banks which will rely upon the initiative directing the cycle thinking about the mammoth difficulties of taking care of asset incorporation, data innovation stage reconciliation, administrative compliances, dealing with the requests of the Union, boosting the workers, client maintenance, creating specialty items, rebranding, and repositioning and the progression intending to proceed with the endeavors in the present financial slowdown, challenges in the credit development, and control on Non-performing Assets with the public authority giving the necessary catalyst every once in a while.
Henceforth, it can be concluded that merging the banks is not a small task. It needs massive movement and understanding to make sure that everything is working seamlessly.