IN 2019 THE NDA II government seemed well set to take up major reforms of the banking sector. The merger of ten public sector banks (PSBs) into four appeared a well thought measure towards consolidation and building size. There were also clear indications on reducing substantially government share of the equity of PSBs. And there were plans for disinvestment of Air India, BPCL... These were expected to attract large revenues to the government. Covid19 has stalled these plans. THE PLAN The government has proceeded ahead with the consolidation of 10 PSBs into four large ones. There have been some murmurs on the merged entities losing their decades-long identities. In a recent webinar organised by MMA (Executive Director, Gp Capt Vijayakumar and his team seemed to perform nithya kalyanams by vastly expanded activities during the lock-down!), thought leader R Seshasayee pointed to the inevitability of the number of bank employees thinning down. He reasoned: the pervasive use of information technology and telecommunications would obviate the need for personal banking. The number of employees in scheduled commercial banks as at the end of March 2018 was listed as 859,075 and bank employees are a highly unionised lot. The unions frequently flex their muscles making fresh demands or protesting reforms. Remember the attempt to paralyse bank transactions by PSB unions from time to time including the latest on the recent mergers? THE STRATEGY An important rationale for the merger is the elimination of cost redundancies. Look at this example of the merger of Andhra Bank and Corporation Bank with Union Bank of India. It is common to find the branches of all the three often functioning in a row in major cities and towns. The initial effort should be to consolidate these three banks\u2019 branches in an area into one which will bring about sizeable savings on infrastructure costs. Logic will demand sizeable savings also on the elimination of redundant manpower. Bank unions have been jumping their guns on such issues. Government on its part has been offering vague assurances that there would be no reduction in employment. This, as one can understand, defies rationale. Trade unions have been fighting hard for decades against the several attempts to increase the workload on bank employees making use of the power and facility of computerisation. One witnessed in the initial years the absurdity of insisting on the same number of ledger entries per employee for quite some time after the introduction of computers. Today with advances in information technology and communications, there has been huge opportunity for improving productivity and hence for rationalising manpower. PROS AND CONS OF MERGER Look also at the humongous increase in the salaries of bank employees in line with the recommendations of successive pay commissions. Such increase has also bred a culture of expecting mini- mum work for maximum remuneration. This was in contrast with the spirit, the willingness and the passion of young, new recruits soon after nationalisation of major banks in 1969. I had witnessed the passion of young, qualified recruits, out on the street helping small traders and small businesses, including sellers of fruits and flowers or hairdressers to avail credit on easy terms. Their salaries, then modest and were in line with the aver- age wages in the informal sector. Today,\u00a0a chief manager of a bank or his assistants do not have time to visit even a mid-sized client. With the weaker sections offered credit at 4 per cent, a bank manager with high salary can neither expand credit nor take care of collections through such regular visits. There is an even more serious issue: this relates to the different cultures of the merged banks. Look at the difficulty of doing this in the case of Punjab National Bank that is strong in the north with Andhra Bank in and around AP and Telengana and the Mangaluru-based Corporation Bank with a long tradition of banking in Karnataka. Look at the colossal failure of synthesising the cultures of Indian Airlines which was taking care, largely of domestic air travel when it was merged with Air India with its orientation towards international travel with a higher set of privileges and pelf. MAJOR M&A FAILURES This is not peculiar to a developing country like ours. A mature economy like that of the US experiences such a problem severely threatening the very survival of large and reputed corporations. I cite the recent instance of the renowned Boeing Corporation which for decades dominated aircraft manufacture and sales of aircraft across the world. Until 1980 Boeing Corporation along with McDonnell Douglas Corp and Lockheed Martin Corp accounted almost for the entire sale of aircraft across the globe. The advent of Airbus Industrie with the support of the governments of booming Western Europe, emerged a strong competitor that rendered initially Lockheed and McDonnell Douglas sick. The latter then merged with Boeing. In recent years Boeing has been massively losing custom to the better operated Airbus. Recent analysis holds the major cause for the decline of Boeing as the non-compatibility of the work cultures of the employees of the two merged entities. I envisage the merged PSBs to face this twin problem: the synthesis of the cultures of the merged entities and the necessity of a drastic cutting of flab.