If the CFOs of Tata Steel, Tata Motors, TCS, Indian Hotels came to Mr. Ratan Tata and said we want to set up a mutual fund and a life insurance company how do you think will he react?
Most probably he would say we have a mutual fund and a life insurance company so please do whatever you want through those companies, right?
However when SBI, Bank of Baroda, IDBI bank, Union Bank, Canara bank, went to the finance ministry and said ‘we want to set up a life insurance company and a mutual fund’ what did the FM say?
Yes boys, go and play!
How these companies are called ‘private sector insurance companies’ beats me, but that is another post!
So now we have at least 7-8 life insurance companies, 7-8 mutual funds belonging to the Government of India – and perhaps competing with each other in the market. Does it make any sense? No.
It does provide employment to many people – employees, ad agencies, rents to landlords, recruitment agencies, business for Jet and Kingfisher airlines – but is it adding any value to the country or to any of the shareholders?
Idbi bank for example is competing with the new gen banks and has to sell tons of insurance and mutual funds for the JVs to make money. Same with Canara, Union, …and the others.
If you speak to the bank, the bank employees are not too happy with the JVs! In one JV the person deputed is just waiting to come back to the parent organisation. In fact he was cribbing about how there was a difference between the 2 organisations in the reimbursement of medical expenses. Yuck. Not at that level at least.
Amazing how things come to this stage! If I had the powers, I would merge all the mutual funds into UTI and all the life insurance companies into LIC. It may sound harsh, but drastic situations do call for drastic measures, do they not?
Will it happen? Of course not.
They could even merge all the banks and have just 2 or 3. This will mean there could be one bank for
– industrial loans
– personal banking
– agricultural loans
– for social lending – to rural poor and urban poor (and handle the NREGA payments)
then hold 26% stake in LIC and UTI. The balance could be sold to the public – and the current deficit closed. The Rupee will be at Rs. 28 to the US $. N murthy will be worried, that is all.
-at least we will not see 5 branches in each road having no business to do.
Will all this happen?
No. Too much vested interest in having so many banks with so many activities – if you cannot convince them, confuse them at work. Full swing. God Bless the Indian deficit.
Post Footer automatically generated by Add Post Footer Plugin for wordpress.