makes no sense for anybody to own so many entities doing the same business. So why should the Government of India own and control 27 banks?

Why not merge it into 4-5 banks to do the following

  1. Concentrate on the real big borrowers – give them equity, debt, merchant banking…etc.
  2. Concentrate on the senior citizens (exclusive do only banking NO lending) only responsible selling / other services
  3. Wholesale banking, and reinsurance?
  4. etc. etc…..

this will make sense…instead of 27 banks…well, well they are talking on those lines…

http://www.dnaindia.com/money/report-govt-may-form-6-stong-banks-from-merger-of-27-psbs-to-tackle-rising-bad-loan-issue-2186336?ref=@CapitalMind_In

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  1. anyway government should formulate some permanent schemes of annuity on line of previous VPBY at least for some basic living expenses on permanent basis and should continue SCSS permanently for sake of senior citizens’ sound sleep!

  2. considering that the country is grossly underbanked (not acounting zero-balance accounts), should we not encourage more banks, perhaps in niche areas instead of carbon copies as done now?

  3. @param: Opening new branches of same banks should solve problem of underbanking not opening new banks. How will opening a new bank will solve underbanking? We have all 27 banks operating in urban areas and NONE in rural, do you think this would correct if we just open a new bank?

  4. @sandeep: in my opinion, innovation does not come by mergers & acquisition. maybe opening more branches is not the only answer. perhaps more innovative products targeting specific client needs is needed – but it is better served by niche banks instead of one bank adding it to the list of service offerings (just see the offerings from icici bank – it can’t even fit in a page!)
    technology & mobile revolution may allow better ideas to make niche services available to target population more efficiently. maybe one bank will tie up with a contractor hiring daily wage workers to remit payments to their accounts at end of day & they can access money via mobile pin from any atm. contractors bear huge risk of dealing with cash & workers do not save enough to make it worthwhile opening an account.
    perhaps one bank may cater to financing small vegetable vendors who pay anything from 5-10% daily interest to get inventory to run their business. would we not be comfortable having our parents deal with a bank that caters to senior citizens better – maybe rbi can prohibit them from selling insurance plans 🙂

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