Triveni Sangam: lipstick on a pig?

Listen to this article
Want to rescue a sick bank? Well, merge it with a healthy one. There is a convincing case for the merger of Indian banks so that they can compete universally. But a forced merger is as fatal as a forced marriage.

So three PSU banks— Bank of Baroda, Dena Bank and Vijaya Bank – will now amalgamate to India’s third-biggest lender after SBI and PNB. The brains behind this were lawyer Arun Jaitley, CA Piyush Goyal and the ‘economist’ Nirmala Sitharaman.

The move to amalgamate three banks may have instant rewards, but critical issues remain unresolved. Clearly, the government wants to take the merger route to consolidate the banking industry. This does not help overcome bad loans. Such mergers give birth to a weaker bank than the original pre-amalgamation of two powerful banks.

Industry specialists are reminding the sad stories of earlier mergers: of New Bank of India with Punjab National Bank, of Global Trust Bank with Oriental Bank of Commerce… They also point out that the bad loans of SBI enlarged after it acquired five associate banks. Former Governor Raghuram G Rajan never liked these kinds of mergers and raised the flag numerous times. He preferred merging weak banks only when their health improved.

Only proficient management minus political meddling can revitalise injured banks.

itter sugar-coated pill for Bank of Baroda

When the government proposed the amalgamation of Dena Bank with Bank of Baroda, the latter rejected it because the former healthwise has been in the Intensive Care Unit for a long time. Further, it failed to exhibit any signs of recovery. But typical of this government, it pushed the offer down the throat of the disagreeing bank by candy-coating the proposal to make it gorgeous by inserting Vijaya Bank. The added attraction, Vijaya Bank is the sole profit-making state-owned bank having the lowest chunk of bad loans.

 

 

Existing Users Log In
   

Latest

French firm Starburst Accelerator SARL partners with IIT Madras to set up €100 Million Start-up Hub

French aerospace and defence firm Starburst Accelerator SARL is...

GT Bharathi to invest Rs 350 crore in senior housing and assisted living sector

GT Bharathi Urban Developers Pvt. Ltd. (GTB), a collaborative...

Another major investment to come in Tamil Nadu…

Speaking at the CII Tamil Nadu’s Annual meet T...

TN Guidance working on linking universities with companies…

Vishnu Venugopal, MD and CEO, Guidance Tamil Nadu, pointed...

Newsletter

Don't miss

French firm Starburst Accelerator SARL partners with IIT Madras to set up €100 Million Start-up Hub

French aerospace and defence firm Starburst Accelerator SARL is...

GT Bharathi to invest Rs 350 crore in senior housing and assisted living sector

GT Bharathi Urban Developers Pvt. Ltd. (GTB), a collaborative...

Another major investment to come in Tamil Nadu…

Speaking at the CII Tamil Nadu’s Annual meet T...

TN Guidance working on linking universities with companies…

Vishnu Venugopal, MD and CEO, Guidance Tamil Nadu, pointed...

IIT Madras hosts 9th edition of Entrepreneurs summit

The 9th E-Summit of the IIT-M is set to...

French firm Starburst Accelerator SARL partners with IIT Madras to set up €100 Million Start-up Hub

French aerospace and defence firm Starburst Accelerator SARL is partnering with Indian Institute of Technology Madras(IIT Madras)to set up an innovative hub for start-ups...

GT Bharathi to invest Rs 350 crore in senior housing and assisted living sector

GT Bharathi Urban Developers Pvt. Ltd. (GTB), a collaborative venture between the GT Group and Bharathi Homes, has announced an investment of about Rs...

Another major investment to come in Tamil Nadu…

Speaking at the CII Tamil Nadu’s Annual meet T Udayachandran, IAS, Finance Secretary Government of Tamil Nadu pointed to the state’s budget as inclusive...