Bank Consolidation Flashcards
Which 3 banks were amalgated ?
- Bank of Baroda
- Vijaya Bank
- Dena Bank
This new entity is at which position in terms of Indian bank sizes ?
3rd
Were these banks amalgated or merged ?
Amalgated
Which committee recommended restructuring of Indian banks ?
Narasimham committee, 1991
Which committee suggested that government should privatise some PSBs ?
P J Nayak committee, 2014
In 2017, government approved the merger of which banks ?
Five associate SBI banks
BMB
What is BMB bank ?
Bharatiya Mahila Bank
Which Panel was made to look into merger proposals of public sector banks in 2017 ?
Alternative Mechanism Panel
Who headed the Alternative Mechanism Panel ?
Minister of Finance and Corporate Affairs, Arun Jaitley
What is EASE ?
Enhanced Access and Service Excellence
What were first 3 themes of EASE reform ?
- Customer Responsiveness
- Responsible Banking
- Credit Off take
What are other 3 themes of EASE reform ?
- PSB as Udyami Mitra
- Deepening Financial Inclusion
- Developing Personnel for PSB
What framework has RBI introduced to check banks’ financial health ?
PCA
What is full form of PCA ?
Prompt Corrective Action
What are the prohibitions to banks under PCA ?
- Distributing Dividends
- Remitting Profits
- Expanding Branch networks
What autonomous body did government set up in 2016 ?
Banks Board Bureau (BBB)
What does BBB recommend ?
Heads of PSBs and Financial Institutions
Which code has helped banks recover through liquidation of assets ?
Insolvency and Bankruptcy Code (IBC)
How much money did the government commit as capital infusion to PSBs ?
2.11 Lakh Crores
What was Sunil Mehta Committee set up to do ?
Faster resolution of stressed assets
What was the name of the five-pronged strategy suggested by Sunil Mehta Committee ?
Project Sashakt
What were some of the arguments against consolidation of 3 banks with regards to corporate governance ?
- Majority stakeholder dictates terms
2. Strong banks shares nosedive
How does consolidating banks become a setback to financial inclusion ?
- Large scale shutting down of overlapping branches
2. Regional audience is lost
What was the challenge with regards to the work culture ?
HR policies vary from each bank
What was the challenge with regards to technology ?
The banks operate on different technologies
Will the consolidation help the health of the banks in the long run ?
No, unless reforms in functioning of PSUs are made
How does the government’s burden of recapitalising the public banks reduce with consolidation ?
Greater capital and liquidity
How does the human resource expertise help the smaller banks ?
They imbibe the best practices
How does consolidation help in employee welfare ?
- No job loss
2. Disparity in wages reduces
How does consolidation help in cost cutting ?
- Duplicate operations are rationalised
2. Excessive manpower removed in long run
How does consolidation lead to increase in business ?
- Customer base
- Market reach
- More services and products
How does the RBI expect the consolidation to resolve the NPA issue ?
Stronger banks absorb strain on weaker banks
How does consolidation help India on a global scale ?
Allows Indian banks to compete with global counterparts
What government reforms are required ?
- Independence from political interference
2. More regulatory power to RBI over PSB
Who runs PSBs ?
Their professional boards
What are some of the other things that should happen ?
- Training for HR
- Create Healthy Entity
- Allow Non-Risky Failure
