Eassy on merger of public sector banks and it's impact on economy in india
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About the mergers :
The merger of Punjab National Bank with Oriental Bank of Commerce and United Bank - this makes it the country’s second-largest Public Sector Bank. Canara Bank and Syndicate Bank becomes one; Union Bank of India, Andhra Bank and Corporation Bank will merge; and so will Indian bank and Allahabad Bank. The business is around Rs 56 lakh crore. Banks with large financial scale, the government says that this bold move will build a strong USD 5-trillion economy.
Benefits of Merger
Some of the important benefits of mergers: 1) Enhanced capacity to increase credit line to bigger projects. 2) Large network of banks and its branches will ensure strong national presence and including global reach in all the countries. 3) Easy to adapt and enhance NextGen technology for banking. 4) It offers the banks to better their ability to raise resources from financial markets. 4) Strong centralisation of the banks will indirectly increase the operational efficiency gains will reduce cost of lending.
about governance reforms .
Governance reforms mostly focusses on making the management accountable to the bank board. A board committee will appraise and assess the performance of executives (general managers and higher authorities). Boards have been given flexibility to introduce a CGM (chief general manager). A chief risk officer, to be recruited from outside and he will be offered market-linked compensation to attract the best talent.
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