Page 32 - Banking Finance January 2022

ARTICLE

Y It may result in the closure of many bank branches, interim period to ensure no disruption in services. But
administrative offices, and ATMs. This may result in after these accounts are seamlessly merged into the
relocation of Staffs. financial system of the new merged bank, Customer
may be required to change their Credit/debit cards as
Y It could ignite clashes between MDs (Managing
Directors), EDs (Executive Directors), and GMs (General well.
Managers). Senior executives in sync are vital while Y Paperwork and keeping financial trail of fixed deposits
incorporating the works, plans and services. made will increase a bit as these will be transferred into
the merged bank.
Y Because of different banking nature, banks don't share
the same culture, systems, and procedures. This may Y It is, however, not clear what will happen to the interest
also lead to clashes. Perhaps large banks may not treat rates of those who have loans running with these banks
the smaller banks employee equally. This could affect as the MCLR rates are different for different banks.
employees' promotion. Furthermore, there may be
possible grounds that out of hatred they could transfer Conclusion
the employees to far-flung places. This may create an Mergers or amalgamations are important for the
unhealthy working environment in the workplace. consolidation and expansion purposes, They are also crucial
Y Public Sector Bank Mergers may also bring down the for Economy as they are most of the times successful in
number of posts at the top-level executives (MDs, EDs, saving weak banks which fail in meeting expectations. As
and GMs). per studies conducted, most of the mergers done in the past
have proved to be an overall success for the weaker banks
Y The merger of a weak bank to a stronger one will also
although there are no concrete parameters to verify this
affect the efficacy of the stronger bank. The losses observation. Hence going by the track record merger and
incurred by the weak banks may wipe-out the profits acquisition in Indian banking have been fruitful for the Indian
earned by these strong banks.
Economy. But Merger also creates variety of problems which
can cause great damage if the process of merger is not
Here is how Customer's are likely to be executed properly.
impacted by this move:
Almost every other individual who has a savings account or So, the point is that Amalgamation should be carried out
fixed deposit with a public sector bank is likely to be with the utmost care and executed in a manner which leads
impacted. to an environment of Trust and agreement between all the
Y Get ready to change the cheque books as the various organizations. If these things are taken properly, and if
banks get merged. While the existing cheque books people, work culture and vision are blended together nicely,
may remain valid for some time, but ultimately they merger may definitely have synergic effects it can create a
win-win situation. Otherwise consequences can be
may be replaced with the cheque books of the merged
entity. damaging.
Y Customer's would have given their bank account Amalgamation had already taken place. Soon the Time will
numbers and IFSC codes for various financial tell us, whether the Amalgamation of Public Sector Banks
transactions like auto credit of dividends via ECS, auto- in India proves to be Boon or Bane?
credit of salary, auto debit of systematic investment
plans (SIPs) in mutual funds and various bills/charges etc. References:
After these accounts are seamlessly merged into the Y https://www.business-standard.com
financial system of the new merged bank, Customer
Y https://latestbankupdate.blogspot.com
may be required to change the details of their bank
given for these purposes. Y https://www.capitalvia.com
Y https://economictimes.indiatimes.com
Y Credit/debit cards issued by the merging banks may
have to be exchanged for those of the merged entity Y https://www.mbauniverse.com
although the former are likely to remain valid for the Y https://www.unionbankofindia.co.in. T

32 | 2022 | JANUARY | BANKING FINANCE