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One down in private sector

Thanks to the recent proposal for merger of ING Vysya Bank with Kotak Mahindra Bank, the number of banks in the private sector falls by one! During the last 14 years, nine banks of the old generation in the private sector have bowed out through mergers. With this, the number of old generation banks in the private sector has come down to 12. Incidentally nine among them originate from the south: Tamil Nadu-4; Kerala-4; Karnataka-1; and one each in Maharashtra, Uttarakhand and Jammu and Kashmir. The oldest among them is over a hundred years and the youngest, 71 years. In the race for achieving higher growth rates, it is difficult to predict how many of them would be able to maintain their individual identity in future.

The proposed merger is a merger of two efficient banks in the private sector, of which one is of the old generation and the other of the new generation. ING Vysya Bank in its original avatar was Vysya Bank, established in Bengaluru in 1930. It was in existence for 72 years, and in 2002 it became ING Vysya Bank Ltd, when the ING group acquired a majority stake. This bank was very successful in mobilising savings bank deposits and lending to the SME sector. Meanwhile, Kotak Mahindra Finance converted itself into Kotak Mahindra Bank in 2003 and embarked upon a branch expansion programme.  

The board of directors of both the banks have accepted the merger and approvals from the regulating authorities are awaited. The shareholders of ING Vysya Bank would get 725 shares of Kotak Mahindra Bank for 1000 shares held by them. The amalgamated bank would become the fourth biggest bank among the new generation banks in the private sector.

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