While the Big
bank merging; what’s my views!!
Year 2017, April 1 – it was not
the fooling news regarding merging of State Bank brands all around India
including our familiar and most competent and trusted bank, State Bank of
Travancore.
The Government the merger of
State Bank of Bikaner & Jaipur (SBBJ), State Bank of Mysore (SBM), State
Bank of Travancore (SBT), State Bank of Patiala (SBP), State Bank of Hyderabad
(SBH) and BMB.
The Management and the so called
experts behind this merger are claiming that the Brand, State Bank of India
will enter in to the group of world’s biggest banks in terms of Turnover and
Capital and said that it has joined the league of top 50 Banks globally in
terms of assets following the merger.
Further, merger or acquiring of these banks to the State
Bank of India (SBI) will help the SBI to cut down Overhead expenditures up to
stationary expenditure itself. And they
believe that they can reduce the huge amount of manpower investment i.e.
employees in the coming year. In an
immediate conclusion, all have to accept the advantages claimed by the so
called experts.
Unfortunately, I have notice some points which cannot be
that much advantageous to all:
In this context, they are already in process of VRS for the
employees. It is understood that they
are not going to employ more people on their permanent role and will encourage
the contract based employees similar to new generation banks.
The Bank Management will have challenges related to staff
integration and rationalization. Since
few of the employee unions are against this merger due to their insecurity and
doubts and Management will have to find more time to regain their trust and
confidence.
Have you ever noticed; even
though there is a SBI branch on your village town, more people are depending on
SBT of the same town. It means that the
special attention or customer care they were enjoying was far better than the
big bank SBI. In one word: Merger will
affect regional flavour and will end regional focus.
We have recently noticed that SBI has kept the separate
account or practicing of keeping a separate book for long repayment defaulters
or doubtful debtors to avoid continuous comments from stack holders and poor
bottom line performing figures due to NPAs.
Different logos of State Bank brands to be considered as a
tactics of ‘Product differentiation’ which always help to obtain more Customers. Now Customers are having one Brand of SBI and
if they are not treated well or not satisfied, SBI will easily lose their Customer
base which has come through this local brands like SBT and other.
Becoming India’s Big Bank, SBI will shift their
concentration to Corporate Customers which will have adverse effect on their
Personal Banking outlook.
As our Govt. is promoting Digitalized Economy, we require
more banking competition rather than more banking consolidation. In other
words, it needs more banks rather than fewer banks which can penetrate to each
and every corner of our country.
Conclusion:
Merger should be carried out with right banks
for the right reasons. Nonperforming shall not be the only reason for merger.
Now that the move has been initiated, the bigger challenge is consolidation in
the rest of the banking system. The
consolidation of Public Sector Banks should not have reason to lose the
customer base since the lack of competition between PSBs will definitely
benefit the Private Sector Banks.
