Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
Popular Search: list of goods taxed at 4% :: empanelment :: VAT RATES :: cpt :: due date for vat payment :: ACCOUNTING STANDARD :: ARTICLES ON INPUT TAX CREDIT IN VAT :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: TAX RATES - GOODS TAXABLE @ 4% :: VAT Audit :: Central Excise rule to resale the machines to a new company :: TDS :: form 3cd :: ACCOUNTING STANDARDS :: articles on VAT and GST in India
« Mergers and Acquisitions »
 In M&A, ratings soft-pedal risks in borrowing binge
 Harvard Business School To Examine Mergers And Acquisitions In New Executive Education Program
 India Inc In Deal-Making Mode; Mergers & Acquisitions Lead The Way
 S&P 500 Futures Rally on Major Mergers and Acquisitions
 The Role Of Brand In Petroleum Mergers And Acquisitions
 Mergers and Acquisitions: What Happens After the Announcement?
 Agency mergers and acquisitions continue to be strong for first-half 2016
 The Intricacies Of Financial And Legal Relationships In M&A
 3 integration considerations for Mergers & Acquisitions
 Mergers and acquisitions take centre-stage as funding for start-ups dries up
 Mergers and Acquisitions reach highest quarterly value in India

Govt to act as patriarch, bless bank mergers
January, 12th 2010

The government today said that it would act as a patriarch and bless public sector bank mergers that are based on synergy.

Unlike the past when a majority of the mergers took place under the Banking Regulation Act to bailout weak banks, majority of which were in the private sector, amalgamations should be based on pure business sense and at the initiative of the banks, Financial Services Secretary R Gopalan said in his first public statement since taking charge 10 days ago.

Banks should look at the cohesiveness in culture, the technology and the economies of scale and the operational benefits that would accrue due to a merger, he added. The government will not force consolidation but will provide the right kind of support. We will be the patriarchs and bless marriages and see how it progresses, Gopalan said at Bancon 2009-10.

This is also the first statement from the government since it met the heads of five public sector banks Punjab National Bank, Canara Bank, Bank of Baroda, Bank of India and Union Bank of India a few weeks ago to reopen a case for consolidation in the public sector bank.

At that time too it was made clear that the M&A activity would be driven by the banks. While some of the players have already undertaken an internal exercise to assess possible candidates, the others are yet to get moving. Bankers said that they geographical synergies would be the biggest drivers.

Though consolidation in the public sector has been talked about in the past too, the government and banks have failed to progress on the issue due to opposition from the political parties and bank employee unions. A case for consolidation was reopened by the UPA in its second innings when it formed the government, without support from the Left parties. The finance ministry is expected to meet the chiefs of smaller public sector banks to discuss the issue.

Apart from consolidation, Gopalan identified four other issues on which public sector banks needed to move. He said that the asset quality, which might come under pressure due to the global financial crisis required attention. He quoted a Crisil study which has estimated that the level of gross non-performing assets would reach 3.5-4 per cent of the gross advances by the end of March 2011, compared with 2.3 per cent at the end of March 2008.

NPAs will remain manageable due to stronger balance sheet of banks and the diversified portfolio but higher provisioning and careful husbanding of weak accounts is required, the secretary said.

He flagged current account and savings bank account (Casa) deposits as the third area on which the state-owned entities needed to focus. In recent years, private players such as HDFC Bank have build a higher proportion of low-cost Casa deposits, compared with public sector players such as State Bank of India, the countrys largest lender. Over the last 15-18 months, the public sector players have managed to improve the share of Casa in their deposit base due to a flight to safety following the global credit crisis.

Gopalan also asked public sector players to focus on human resource capabilities, for which an expert committee headed by former Bank of Baroda Chairman and Managing Director A K Khandelwal has been set up. He also said that the state-owned players should focus on strengthening the adoption of global standard such as International Financial Reporting Standard (IFRS) and Basel II norms.

He added that financial inclusion could help banks not only fulfill the requirements of the under-banked population but also provide them access to a new customer segment and access to low-cost resources.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Careers

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions