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: form 3cd :: articles on VAT and GST in India :: Central Excise rule to resale the machines to a new company :: ACCOUNTING STANDARD :: VAT Audit :: TAX RATES - GOODS TAXABLE @ 4% :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ACCOUNTING STANDARDS :: VAT RATES :: ARTICLES ON INPUT TAX CREDIT IN VAT :: empanelment :: list of goods taxed at 4% :: due date for vat payment :: cpt :: TDS
 
 
« Mergers and Acquisitions »
  Govt to explore mergers & acquisitions across state-run units
 Government to explore mergers & acquisitions across state-run units
 Govt mulls merger of 6 consultancy firms into Engineers India
 13 Design Industry Mergers & Acquisitions
 25 anesthesia mergers & acquisitions in the past year
 3 Big Mergers & Acquisitions That We Could See in 2017
 Govt mulls merger of six consultancy firms into Engineers India
 MENA mergers and acquisitions perform soundly in 2016 despite challenges
 Govt to explore mergers & acquisitions across state-run units
 Mergers & Acquisitions Heat Up the Promo Industry in January
 Mergers and Acquisitions: 2016 Update

Mergers of public sector banks favoured
April, 03rd 2009

The financial sector assessment report, prepared by the Reserve Bank of India (RBI) and the Central Government, has favoured the merger of public sector banks (PSBs) having a government holding bordering on 51 per cent with those having a much higher state-holding to ensure that their business growth does not suffer due to capital constraints.

If the government is not able to contribute its share of the capital needed for the growth of the public sector banking system, it will need to reduce its share holding below 51 per cent. This requires legislative changes, the report, which was released on Monday, said.

However, pending enactments of enabling legislation to reduce majority ownership, and keeping in mind the synergies, one option for the government could be to consider amalgamating banks, it added. It emphasised that such mergers should be considered only when there was positive synergy and complementarity in the regional spread among the banks proposed to be amalgamated.

The report indicated that PSBs would need additional capital to meet Basel II norms and maintain an asset growth for the overall projected growth of the economy at 8 per cent and consequent growth of risk-weighted assets (RWAs).

This has the potential to further aggravate a growing apprehension that public sector banks growth could be constrained in relation to other players.

The extent of additional capital required from the government is expected to be manageable, provided the RWAs grow by within 25 per cent annually and total cost of recapitalisation would be lower than in most other countries.

The government has already announced plans to infuse capital worth Rs 20,000 crore over two years in public sector banks to maintain a comfortable capital adequacy ratio of 12 per cent. Some of the banks, including Central Bank of India and Vijaya Bank, have already received the first tranche of capital. Referring to monitoring of state-owned banks, the report said any suggestion that the government must exit its monitoring function of these entities and leave governance entirely to a duly-constituted board was unrealistic in the present environment.

Such a move might be undesirable as well. A reduction in the governments majority shareholding would also enable the public sector banks to retain and attract talent as, in that case, their incentive structure would not be limited by the government pay structure.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Integrated Software Solutions Integrated Software Development Integrated Software Services Integrated Software Solutions India Integrated Softw

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