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    India Case Study

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    Makame Mahmud Dipta
    India is consolidating 27 public sector banks into 12 banks through various mergers. The key mergers include Punjab National Bank, Oriental Bank of Commerce, and United Bank of India merging into one bank; Canara Bank and Syndicate Bank merging into one; and Union Bank of India, Andhra Bank, and Corporation Bank merging into one. The goal of these mergers is to make the banks larger in scale to support the Indian economy becoming a $5 trillion economy and increase financial inclusion. Larger banks can better diversify risks and have stronger profitability through scale benefits.

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    India Case Study

    Uploaded by

    Makame Mahmud Dipta
    86 views4 pages
    India is consolidating 27 public sector banks into 12 banks through various mergers. The key mergers include Punjab National Bank, Oriental Bank of Commerce, and United Bank of India merging into one bank; Canara Bank and Syndicate Bank merging into one; and Union Bank of India, Andhra Bank, and Corporation Bank merging into one. The goal of these mergers is to make the banks larger in scale to support the Indian economy becoming a $5 trillion economy and increase financial inclusion. Larger banks can better diversify risks and have stronger profitability through scale benefits.

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    India is consolidating 27 public sector banks into 12 banks through various mergers. The key mergers include Punjab National Bank, Oriental Bank of Commerce, and United Bank of India merging into one bank; Canara Bank and Syndicate Bank merging into one; and Union Bank of India, Andhra Bank, and Corporation Bank merging into one. The goal of these mergers is to make the banks larger in scale to support the Indian economy becoming a $5 trillion economy and increase financial inclusion. Larger banks can better diversify risks and have stronger profitability through scale benefits.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    86 views4 pages

    India Case Study

    Uploaded by

    Makame Mahmud Dipta
    India is consolidating 27 public sector banks into 12 banks through various mergers. The key mergers include Punjab National Bank, Oriental Bank of Commerce, and United Bank of India merging into one bank; Canara Bank and Syndicate Bank merging into one; and Union Bank of India, Andhra Bank, and Corporation Bank merging into one. The goal of these mergers is to make the banks larger in scale to support the Indian economy becoming a $5 trillion economy and increase financial inclusion. Larger banks can better diversify risks and have stronger profitability through scale benefits.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 4

    • India will now have 12 Public Sector Banks from 27 Public Sector Banks in 2017

    • 4 Consolidations
    • Punjab National Bank, Oriental Bank of Commerce, & United Bank of India will be merged as one
    • Canara Bank & Syndicate Bank will be merged as one
    • Union Bank of India, Andhra Bank & Corporation Bank will be merged as one
    • Indian Bank & Allahabad Bank will be merged as one

    • The merger of these banks is aimed at making India a USD 5 trillion economy.
    • A consolidated banking structure would be a positive development in the long term.
    • A large bank enjoy scale benefits leading to better diversification of risks and strong overall profitability.
    • A bigger bank would also work well in achieving financial inclusion, a key objective of government.
    • Cash rich firms use the acquisition route to buyout an established player in a new market and then build upon the existing platform.
    • Many different banks are fighting for the same market space offering same products at almost same margins which encourages mis selling, fake and illegal offers, and creating a mess in the
    minds of customers. Consolidation will actually reduce competition amongst banks.
    • Those banks who have a very limited presence in the rural areas can increase their presence by buying out regional banks.
    • Weak banks who have very poor balance sheets can merge with a better and bigger bank rather than going on for liquidation or a state of bankruptcy.
    • Organic growth takes years in present day economic dimensions. Dynamic firms prefer acquisition route to grow quickly in size and geographical reach.
    Reasons for consolidation (shorter version):

     This is a step by government towards building Next-Generation Banks. The consolidation of public sector
    banks will give them scale
     Enhanced capacity to increase credit
     Banks with a strong national presence and international reach
     Reduction in lending cost
     Next Generation technology for the banking sector
     Improved ability to raise market resources
    Individual Balance Amalgamated
    Sheet Size Balance Sheet Size
    PNB Rs. 1,182,224 Cr
    OBC Rs. 404,194 Cr Rs. 1,794,524 Cr
    United Bank of India Rs. 208,106 Cr
    Canara Bank Rs. 1,043,249 Cr
    Rs. 1,520,295 Cr
    Syndicate Bank Rs. 477,046 Cr
    Indian Bank Rs. 429,972 Cr
    Rs. 807,859 Cr
    Allahabad Bank Rs. 377,887 Cr
    Union Bank Rs. 741,307 Cr
    Andhra Bank Rs. 398,511 Cr Rs. 1,459,434 Cr
    Corporation Bank Rs. 319,616 Cr
    Individual Balance Amalgamated Balance
    Sheet Size Sheet Size
    PNB Rs. 1,182,224 Cr
    OBC Rs. 404,194 Cr Rs. 1,794,524 Cr
    United Bank of India Rs. 208,106 Cr
    Canara Bank Rs. 1,043,249 Cr
    Rs. 1,520,295 Cr
    Syndicate Bank Rs. 477,046 Cr
    Indian Bank Rs. 429,972 Cr
    Rs. 807,859 Cr
    Allahabad Bank Rs. 377,887 Cr
    Union Bank Rs. 741,307 Cr
    Andhra Bank Rs. 398,511 Cr Rs. 1,459,434 Cr
    Corporation Bank Rs. 319,616 Cr
    CASE STUDY INDIA
    India has decided to form 12 public sector banks from 27 public sector banks
    Name of Bank Individual Balance Sheet Size Amalgated Balance Sheet Size
    Punjab National Bank Rs. 1,182,224 Crores
    Oriental Bank of Commerce Rs. 404,194 Crores Rs. 1,794,524 Crore
    United Bank of India Rs. 208,106 Cr
    Canara Bank Rs. 1,043,249 Cr
    Rs. 1,520,295 Crore
    Syndicate Bank Rs. 477,046 Cr
    Union Bank of India Rs. 741,307 Cr
    Andhra Bank Rs. 398,511 Cr Rs. 807,859 Crore
    Corporation Bank Rs. 319,616 Cr
    Indian Bank Rs. 429,972 Cr
    Rs. 1,459,434 Crore
    Allahabad Bank Rs. 377,887 Cr

    • Reduction in cost of funds due to significant reduction operating cost resulting from removing duplicate costs such as branches, IT systems, etc.
    • Enhanced capacity to extend credit at more attractive terms than present
    • Banks are set to become large with strong national presence and considerable international reach8

    #4

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