SBI Associates to be merged with SBI by 31st August
Dear Sehpaathians,
We are here with information right from Mumbai, where issue of banking merger was talked about at SBI Annual General Meeting. What we know from the sources is that the government has pressed on banking merger at a faster pace, first mergers to take place are of SBI Associates i.e. State Bank Of Bikaner and Jaipur, State Bank of Mysore, State Bank Of Travancore, State Bank of Hyderabad, State bank of Patiala. Talks are also wide on merger of Bhartiya Mahila Bank with SBI. BMB currently has over 100 branches and business in tunes of 10000cr.
Banking Board Headed by Sh. Vinod Rai has recommended in merging all banks now into 7 banks. If merged every Bank will have an asset worth of atleast 10L crores which will bring them at par with international Standards. Banking board has suggested splitting banks in group of 4-5 banks depending on their balance sheets and making a new bank itself. Using of Name of any bank in the new name has been discouraged by the banking board.
Why mergers are being done
In India there are 28 PSU Banks who have been competing with each other for business. But in recent times, after the recession hit the world in 2008, the need for consolidated strong banks is being felt across the country. Currently Indian banks except State Bank of India, doesn’t match with international norms. The balance Sheets of all banks have been a worry, and increasing provisioning for NPA has made things tougher.
Basel 3 norms are round the corner for which govt. need to invest 1.5Lac crores in banking in next 5 years. Govt. has no funds available. So best way out is merge banks, make them big, and make them strong enough so that they could get the required capital themselves.
Why Banks Staff/Unions are opposing
- Banks have a bad experience from past mergers of State Bank of India with SBI. The staff were posted to different places far away from their homes.
- There were some Salary differences. i.e. Staff was given one increment less on merger
- There was a superiority and inferiority staging among staff during mergers
- Banking Unions of that bank lost their positions
Its effect on Hiring
Mergers will surely affect hiring by banks. There have been a lot of bank hiring in past 5 years due to enormous amount of people retiring from bank. This hiring was expected to continue upto 2020 at the same pace. But if bank mergers happen, it won’t be a happy news for banking aspirants. The reason will be staff will become more than required. Due to Bank mergers, number of branches across India will decrease and so will staff requirement. For E.g. if 4 banks are merged and all 4 are having branches nearby each other, atleast 2 branches will be vacated.
Some Advantages for Banking Staff
- Due to consolidation in a few years the banking staff requirements is bound to reduce to 6 Lac from 8 Lac. Due to this you might see some big salary hikes in Banking industry.
- VRS Schemes may come back. A few years ago to reduce the staff in banks, VRS schemes came. You can expect such a scheme to come back if merger happens.
Approximate Time for Banking Mergers
It is expected that the process of banking mergers will be completed by End 2018 before the general elections in 2019.
Links of various newspapers:
- PSB mergers top priority under banking reforms – Economic Times
- Public sector bank consolidation: A painful journey ahead – The Hindu
- Big is beautiful: Centre plans to merge PSBs into larger entities – Hindustan Times
- ‘It’s the right time to go for consolidation: Arundhati Bhattacharya – Economic Times
- SBI Associate banks propose merger with parent SBI – The Hindu
