On many forums there are many solutions for the psu banks. Most of the solutions are – privatize them, merge them, etc. There can be other solutions too…

  1. Make a list of all the psu banks in terms of an over all score. Tell the bottom 5 that they cannot accept new deposits, cannot open new accounts, cannot sanction new loans,…
  2. Tell the bottom 10 that they cannot recruit at all
  3. Ask all the banks to announce a VRS and let people go
  4. Close branches / merge branches across all banks
  5. Allow migration of accounts, and people from one bank to another
  6. Allow only the top 5 to lend more than Rs. 500 crores to one client
  7. Force borrowers borrowing more than Rs. 10,000 crores to go to the capital market for their debt requirements
  8. Rationalize stamp duty across instruments and geographies
  9. Merge all the life insurance companies belonging to all the banks into LIC
  10. Merge all the general insurance companies into GIC
  11. Merge all the mutual funds into UTI…
  12. Over 5 years the bottom 5 will close down. Repeat ranking the 22 banks..
  13. Over 15 years you will be left with 5 banks 🙂


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  1. Erm, no.

    Your son/daughter/loved one falls sick. You take him/her to a doc. He/she needs surgery. Do you want the doc to be under intense pressure (perhaps fearing for his life) when performing the operation?

    Operating under a death threat (which is what you propose) is the worst motivation of them all. No good comes out of it. In fact you’re guaranteed the worst performance- maybe even more cheating and jugaad.

    There’s this awesome dialog from the movie Bluffmaster: Dhanda karna hai to dhandha kar, baat karna hai to baat kar, goli chalana hai to goli chala.
    Don’t mix them. Figure out the one thing you wanna do and do it.

  2. Unfortunately so many people are working in PSU banks and most of your reader like Shan will have some one ore the other relative/friend working at a PSU bank that overwhelmingly middle class will oppose shutting down of the PSU banks even though as a country so many inefficient banks are not required. Problem is that these PSU banks cant be allowed to fail. So they will keep on repeating their mistakes since they know that the government is always there to bail them out.

  3. can we also add consolidation of ATMs to the list? my blood boils on seeing multiple ATMs so close to each other with most of them empty while some areas having huge line outside a single atm (mostly SBI).

  4. subra, how about a similar recommendation for MFs? do a ranking of all MFs on their index funds wrt tracking error & exp ratio. the bottom 5 should be asked to hand over their non index funds to other fund houses. most ikely we’ll be left with a similar number there as well.

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