Public Sector Bank Mergers from April 1, deadline appears challenging - 11th Bipartite Wage Settlement - Latest News

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Wednesday, 26 February 2020

Public Sector Bank Mergers from April 1, deadline appears challenging

The mergers of the Publi Secotor Bank appears to be challengins from April 1st as there seems to be more odd in the way of meeting the target date as a series of regulatory approvals and clearances are still pending. 

It is believed that the Prime Minister's Office (PMO) has sought details from these lenders about their financial projections for the next three to five years.


The Major hurdles in to Bank Mergers are :

1. It is believed that the Prime Minister’s Office (PMO) has sought details from these lenders about their financial projections for the next three to five years. Details in respect of NPAs, capital requirement, credit growth and cost savings on account of the mergers have been asked for

2. Even after Cabinet approval to the proposed mega merger plan, officials said, fixation of share swap ratio, shareholders consent and other regulatory approvals are expected to take at least 30-45 days.

3. The Scheme of Amalgamation has to be laid before Parliament for 30 days for the perusal of the members. The second-half of the Budget session is scheduled to start on March 2. Last year in August, the government announced the consolidation of ten public sector banks (PSBs) into four mega state-owned lenders.


4. According to a senior banker, information technology integration of Vijaya Bank and Dena Bank with Bank of Baroda is still in process even after 10 months of merger. In addition, the HR issues still continues to hamper business, causing inconvenience to customers.

5. The mega merger would create greater disturbance in the banking system and will affect the operation especially loan sanction as there will be chaos initially for few months.

6. All India Bank Officers’ Confederation general secretary Soumya Datta claimed that the decision was taken in the absence of full board. There was no representation from officers and staff in the board of any of these ten banks so decision is illegal.


7. The grouping of banks in the consolidation plans does not appear to be logical as it would lead to large scale closure of branches than expansion of banking services. For example, the merger of Syndicate Bank with Canara Bank would lead to large scale closure of branches as both are Karnataka-based and have strong presence in South India

8. Although the software system is same, versions are different. So the technology upgradation will take a minimum of nine months to two years, depending on the size of the banks.



Based on the above facts the chances of the merger becoming a reality beginning next fiscal year seems little unrealistic at the moment

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