Why does the government need so many banks? With different names, multiple branches, multiple ATM booths,….but essentially doing the same work.
The metros are over banked – seeing 4-5 branches in a small road is a given.
Well the reasons are simple. If there is a Rs. 10 crore fraud in a small private sector bank, it is enough to bring the bank down. The figure changes as the scene changes, that is all. So a small bank with a big NPA problem is hard to handle.
So a small bank will be merged with a slightly bigger assets under management. So if a small bank is merged into a slightly bigger bank, the NPA can be hidden for a longer period of time.
So all the small banks will be merged with slightly bigger banks – and the process will continue……for a long period of time. Of course if it backed by a higher end politician it will be constantly bailed out – so that it can retain its entity….
Sadly these banks will continue to recruit, ‘train’ , ….and help a lot of people make a living. This will not be a ‘career’ but it will pay a decent indexed salary and an indexed pension. Not bad considering how difficult it is to get jobs outside.
These banks – and their associates – brokerage, mutual funds, commodities, life and general insurance – DO NOT HAVE TO EARN money, so they will queer the pitch for the other players. This is already happening in the housing loan/ mortgage market.
Anyway as time goes by a few will be merged, why some may even be closed, inshahallah…
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