Merger of banks, the right move

No sooner did the Union Finance Minister Nirmala Sitaraman came up with the most significant announcement of merger of nationalised banks, numerous updates have been hogging in every source of information outbreak.

This scheme of merger is an utmost blend of keen articulation of knowledge and procedures to make the Indian banking sector work smoothly without pushing it into doldrums.

For a layman to understand a merger, it can be stated as a process meant to streamline the entire structure of banking.

When one bank or a PSU is brought into a merger with another, it has tremendous financial advantages like the cost of providing services can be reduced along with consolidation of debts, rate of NPAs will come down as the customer base will be under a tight noose of the post-merger norms, cash-demand regulation, task convenience at various levels of bank's operation, strengthened market position and credibility, ultimate capital adequacy, CASA (Current and Savings account), retail loans and profit indications can be improved upscale.

Merger of banks will create a path of synergic effect which indeed reduces the loopholes in banking regulations along with prevention of prospective breaches.

Madhulika N, Hyderabad