Page 6 - Banking Finance May 2019 N

BANK UPDATE

Jan Dhan account bal- Government assigns new roles for top brass of erst-
ances rise while Vijaya Bank, Dena Bank
The balances across banks in The Appointments Committee of the Cabinet (ACC) has approved a slew of pro-
Pradhan posals of the Department of Financial Ser-
Mantri Jan vices (DFS), providing new postings for the
Dhan Yojana top brass of erstwhile Vijaya Bank and Dena
(PMJDY) ac- Bank.
counts are While Karnam Sekar, MD & CEO of Dena
showing a steep increase in recent Bank, has been appointed as the chief of In-
months. Up to August-September dian Overseas Bank (IOB), RA Sankara
2018, the balance in the accounts Narayanan, MD & CEO of Vijaya Bank, has
was increasing at the rate of Rs. 600 been appointed as the MD & CEO of Canara Bank.
crore to Rs. 800 crore a month.
Rajesh Kumar Yaduvanshi, Executive Director of the erstwhile Dena Bank, has
For instance, in September, the total been appointed as the Executive Director at Punjab National Bank. Nageswara
funds went up a modest Rs. 782 crore Rao Y, Executive Director, Vijaya Bank, has been appointed as the Officer on
compared to the previous month. In special duty and whole time director in Syndicate Bank.
October 2018, before elections to five
Murali Ramaswami, Executive Director, Vijaya Bank has now been appointed
State assemblies began, there was a
as Executive Director in Bank of Baroda (amalgamated entity).
Rs. 4,474-crore jump. In November,
however, there was a sudden dip.
Bank mergers to increase efficiency
From December again, there has
Consolidation in banking sector will help lenders lower costs and efficiently scale
been a steep rise in the total balance,
and it has since been steadily increas- their operations, said researchers at the Re-
ing. For instance, from December serve Bank of India.
2018 to January 2019, the balance Labor cost efficiency, or output per employee,
went up by Rs. 2,438 crore followed moderated across the sector between 2005-
by Rs. 3,207 crore and Rs. 3,476 crore 2018, according to the recently published pa-
in February and March respectively. per. The authors added that public sector
The balance in the middle of every banks fared better than private rivals on this
month is taken into consideration to metric because they slowed hiring and
arrive at comparative figures. adopted technology, while larger banks reaped the benefits of scale.
After a long lull, there has also been "This finding provides an additional rationale for recent mergers of banks, both
a spurt in the number of PMJDY ben- amongst public and private sector banks, and suggests that further avenues of
eficiaries. After a muted growth at 32 consolidation in the banking sphere may be explored," they wrote.
crore for many months, new accounts Mergers and bailouts have become a key policy tool in India, as lenders try to
are now getting added more ener- clean up one of the world's biggest piles of bad loans after a credit spree went
getically, taking the total number of sour. State-run Bank of Baroda became the third-largest lender after it was
accounts to 35 crore as of March 13. merged with Dena Bank and Vijaya Bank earlier this month. Insurance giant,
"It is not possible to rule out the im- the Life Insurance Corporation of India, has also taken over IDBI Bank Ltd. as
pact of elections. There have been in- authorities threw a lifeline to the struggling lender.
stances where candidates are depos-
The overhang of bad debts is driving up the cost of capital and pushing the cen-
iting money directly into beneficiaries'
tral bank, which is also the banking regulator, and the government, which owns
accounts as smaller amounts are not
state-run banks, to opt for mergers.
tracked. But this can push up the
overall balance," he said on the con- The paper finds that while India had 19 cost efficient banks in 2005, this num-
dition of anonymity. ber fell as low as 12 before recovering slightly to 14 by the end of 2018.

6 | 2019 | MAY | BANKING FINANCE