Domestic banking sector saw new ray of hope with NDA government opening
new doors. Touted to be one of the biggest public sector bank ‘State Bank of India
(SBI)’ and its subsidiary banks were brought under one roof after the Union
cabinet recently approved the proposal to merge all the SBI banks.
The decision of the five associate banks of SBI namely State Bank of Bikaner and Jaipur, State Bank of Travancore, State Bank of Patiala, State Bank of Mysore, State Bank of Hyderabad with the Indian Women's Bank will be merged with SBI.
The first merger took place in 2008, where State Bank of Saurashtra was merged with SBI. It was later followed by State bank of Indore that merged with SBI in 2010. And now the latest merger of the five banks with SBI. With this latest merger of the assets of subsidiary banks & SBI, all SBI ATMs, branches, including the State Bank of India will be worth Rs 37 lakh crore and will have 22,500 branches, amounting a whooping fifty million customers, 60,000 ATMs and the total number of employees will reach to 2,85,500.
The move seems to be fantastic, Isn’t it?
Why Merger?
Currently, none of the Indian banks has made it to the top 50 banks across the world. But after this latest merger, SBI will be on 45th position. This will inturn benefit the government as SBI is a government bank. Not only the ATMs, but also employees of the bank will be merged. This will lead cost reduction. Finally the customer will be at receiving end as said by State Bank of India Chairperson Arundhati Bhattacharya after the merger proposal was approved by the Union Cabinet. State Bank of India currently needs investments approximately three billion to cover losses.. In the next decade, SBI would require 5 billion for investing in non- performing assets of the bank, experts who can lead the bank etc. According to experts, the Government has now decided to merge SBI to profitable subsidiary banks because those banks will act as a financial cushion.
The customer is at loss!
In 2008 nations were hit with Global financial crises and during the same time the economies of the countries suffered as the top banks were in loses. But the regional bank in developing countries were having incredible profits.
State Bank of Hyderabad (SBI) Bank, a subsidiary of SBI, each year has been earning a profit of Rs 1,050 crores. After the integration of various branches of the banks, the number of banks will be reduced and this will lead to loss in employment, infrastructure management etc. With a population of 125 million people and less number of banks, the employees of the banks will not be able to give proper attention to the customer. The merger of subsidiary banks in their respective states will also have a huge impact on farmer’s petty traders and others as they will have to move to main branch and this will in turn delay their work.
With SBH merging with SBI, the Telangana will also face the hit as the profits will now no more come the state but will go to Central Government.
During the Sensory Association meeting Finance Minister, Arun Jaitley had said, "We need strong banks for economic growth of the county.” But, now, the analysts say that strongest banks will weaken the future.
The decision of the five associate banks of SBI namely State Bank of Bikaner and Jaipur, State Bank of Travancore, State Bank of Patiala, State Bank of Mysore, State Bank of Hyderabad with the Indian Women's Bank will be merged with SBI.
The first merger took place in 2008, where State Bank of Saurashtra was merged with SBI. It was later followed by State bank of Indore that merged with SBI in 2010. And now the latest merger of the five banks with SBI. With this latest merger of the assets of subsidiary banks & SBI, all SBI ATMs, branches, including the State Bank of India will be worth Rs 37 lakh crore and will have 22,500 branches, amounting a whooping fifty million customers, 60,000 ATMs and the total number of employees will reach to 2,85,500.
The move seems to be fantastic, Isn’t it?
Why Merger?
Currently, none of the Indian banks has made it to the top 50 banks across the world. But after this latest merger, SBI will be on 45th position. This will inturn benefit the government as SBI is a government bank. Not only the ATMs, but also employees of the bank will be merged. This will lead cost reduction. Finally the customer will be at receiving end as said by State Bank of India Chairperson Arundhati Bhattacharya after the merger proposal was approved by the Union Cabinet. State Bank of India currently needs investments approximately three billion to cover losses.. In the next decade, SBI would require 5 billion for investing in non- performing assets of the bank, experts who can lead the bank etc. According to experts, the Government has now decided to merge SBI to profitable subsidiary banks because those banks will act as a financial cushion.
The customer is at loss!
In 2008 nations were hit with Global financial crises and during the same time the economies of the countries suffered as the top banks were in loses. But the regional bank in developing countries were having incredible profits.
State Bank of Hyderabad (SBI) Bank, a subsidiary of SBI, each year has been earning a profit of Rs 1,050 crores. After the integration of various branches of the banks, the number of banks will be reduced and this will lead to loss in employment, infrastructure management etc. With a population of 125 million people and less number of banks, the employees of the banks will not be able to give proper attention to the customer. The merger of subsidiary banks in their respective states will also have a huge impact on farmer’s petty traders and others as they will have to move to main branch and this will in turn delay their work.
With SBH merging with SBI, the Telangana will also face the hit as the profits will now no more come the state but will go to Central Government.
During the Sensory Association meeting Finance Minister, Arun Jaitley had said, "We need strong banks for economic growth of the county.” But, now, the analysts say that strongest banks will weaken the future.
For more Latest
Headlines News please visit Online Newspaper NewsDistill
No comments:
Post a Comment