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) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Latest Expert Exchange
« Mergers and Acquisitions »
 The difference between mergers and acquisitions
 Mergers and acquisitions: Know what rights you have as employees
 Deals of the day-Mergers and acquisitions May 8, 2018
 Motherson Sumi plans 3 acquisitions in 6 months
 How tax reform is expected to alter the mergers and acquisitions landscape
  Metro Cash and Carry eyes acquisitions to aid digitization plan
 Metro Cash and Carry eyes acquisitions to aid digitization plan
 Deals Of The Day-Mergers And Acquisitions May 1, 2018
 Deals of the day-Mergers and acquisitions APRIL 26, 2018
 Wipro Consumer Care scouts for acquisitions in developing countries
 Top 5 most interesting mergers and acquisitions of the past year

Bank mergers mooted to beef up capital
June, 24th 2009

The Chairman and Managing director of the Central Bank of India, S. Sridhar, said the idea of merging public sector banks is perhaps being mooted to strengthen the capital base of the banks, Mr. Sridhar said on the sidelines of a panel discussion organised by the Commonwealth Secretariat on Micro, Small and Medium Enterprises (MSME) and the global economic slowdown in Bangalore on Monday.

Asked whether bankers are worried about the increase in the fiscal deficit, Mr. Sridhar told The Hindu that although there were some apprehensions that higher government borrowings might crowd out private borrowings and result in higher interest rates, this had to be balanced by the possibility that the higher deficit might provide an impetus to demand in the economy.

Mr. Sridhar said MSMEs, which contributed more than one-third of the countrys exports, were badly affected by the synchronised downturn in the global economy. Unlike past episodes of recessions, a recovery from this crisis is unlikely without a coordinated response from all major nations, he said. The crisis has resulted in a fall in demand for goods and services. People are saving, not incurring personal debt and want to avoid risks, he said. The most severe impact has been on weaker sections such as small and marginal farmers, people working in informal occupations and MSMEs, he said.

Re-regulation

The crisis had resulted in a trend towards re-regulation in the financial sector across the world, Mr. Sridhar said. Old-fashioned bankers who did not indulge in a high degree of leverage during the boom are now having the last laugh, he said. Banks which wrote off the loans of small farmers have emerged unscathed from the crisis.

As a result of the crisis, the working capital cycle of MSMEs has become elongated, Mr. Sridhar said. They find the need to hold inventories longer and that payback periods are now longer, he said. The managements of MSMEs are now under greater pressure to find markets and managerial talent, especially those who can contribute to innovation which results in changes in processes in their units during these tough times, Mr. Sridhar said.

He said a dedicated credit rating agency exclusively meant for rating MSMEs would help reduce risks for lenders.

He suggested greater flexibility in lending, taking into account borrowers ability to pay.

He said banks such as his were now providing factoring services to MSMEs that supplied to large corporates. This, he said, reduced the burden on the working capital requirements of MSMEs. Central Bank of India planned to increase its loan portfolio to MSMEs by 35 per cent during the current year. At present, the sector accounted for about eight per cent of the banks advances. Mr. Sridhar said the bank hoped to increase the share of this sector to 10 per cent in 2009-10.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 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