Merger Mania 8

7/29/2019 Merger Mania 8

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MERGER MANIA VIII

BY

S.SRINIVASAN

PRESIDENT

NATIONAL UNION OF BANK EMPLOYEES

(NUBE)

Bol, ke lab azaad hai tere:

Bol, zabaan ab tak teri hai,

Tera sutwan jism hai tera

Bol, ke jaan ab tak teri hai.

Dekh ke ahangar ki dukaan mein

Tund hai shule, surkh hai ahan,

Khulne-lage quflon ke dahane,

Phaila hare k zanjeer ka daaman.

Bol, ye thora waqt bahut hai,

Jism o zabaan ki maut se pahle;

Bol, ke sach zinda hai ab tak

Bol, jo kuchh kahna hai kah-le!

Speak, your lips are still free.Speak, your tongue is still yours.

Your strong body is still your own, sospeak, while your soul is still yours.

See how in a blacksmith's shop,the iron is red, and in the flames' heat

all the locks begin to open their mouths;all the chains disperse.

Speak! This little time is so vast,before the death of body and tongue.

Speak: truth is alive, even now.Speak. Say what you must.


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-Faiz Ahmed Faiz

COMMEDY OF CONTRADICITONS

Consolidation Diagnosis : Constipation of Thought & Media Diarrhea

India, the second largest populated country, has total 77 banks including 27public sector banks, 20 private banks and 30 foreign banks. But still morethan 40% of the adult population in India does not have access to bankingservices so the need to expand coverage is obvious. A large part of the sector

is government-owned; most major banks were nationalized in 1969. But asignificant jump in coverage means large investments and the governmentdoesn't have the money. Nor is it ready to dilute its stake. It is ironical thatgovernment says doesnt have the money. On one hand the government istalking about consolidation of pubic sector banks which will result in closureof many public sector banks branches, on the other hand it is talking aboutgiving licenses to corporate to setup new banks.

The rhetoric often peddled for consolidation is that, this huge Indianuniverse has not clinched any significant global footprint supporting their

arguments they state Country's largest lender - the State Bank of India(SBI) ranks 60th globally in 2012 in terms of tier I capital (equity +reserves). The second largest bank (in terms of loan book) ICICI Bank 's

position is way below at 110. Among top 200, four more banks includingHDFC Bank , Bank of Baroda , Canara Bank and Punjab National Bankmanaged to find their ranks. Financial inclusion or basic banking service forevery Indian seems to be the motivating factor for expanding banking reach.According to Government and their sponsored experts, consolidationshould be the ideal solution to it, not new banks. "There is no substitute for

consolidation in PSU bank many CEOs of public sector banks air in mostthe forums. The reason they quote often is "Indian companies are spreadingtheir tentacles by acquiring companies abroad. For funding cross-countryacquisitions Indian banks should acquire size and sophistication. State Bankof India is considered to be small fry in the global banking arena. Despitecornering about 25 per cent of the banking business in the country, SBI doesnot rank in the top 20 global banks. Ideally, India should have 4 or 5 global-
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scale .many of them have suggested road maps for consolidations. , somesmall public sector banks) have not been able to show a healthy

performance. They are even hesitant to act as a lead bank and are contentwith being a consortium member . The need of the hour is merger of small

banks to emerge into large entity (ies). If the mergers can address this issueand give some relief to the government, it would be an added advantage,

besides ensuring other synergies in scale of business, even geographicalspread (branch concentration) and lower NPAs of the merged entity

According to one CEO s once all SBI subsidiaries are merged SBI, it wouldbe among the top 10 banks in the world in terms of various parameters.According to another CEO of a public sector bank the mergers can addressthis issue and give some relief to the government, it would be an addedadvantage, besides ensuring other synergies in scale of business, even

geographical spread (branch concentration) and lower NPAs of the mergedentity. He had even suggested the following market considerations for

possible mergers

Allahabad Bank, Central Bank, Corporation Bank and P&S Bank -projected to be the fourth largest

Canara Bank, Indian Bank, BoM, IOB and United Bank of India -projected be the second largest bank

SBI, BoI and BoB - projected to be among the largest banks in theworld

PNB, Vijaya Bank, Andhra Bank and IDBI - projected to be the thirdlargest


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OBC, Syndicate Bank, UCO Bank and Dena Bank - projected to bethe fifth largest

The process of issuance of licenses to corporate to start new private bankswas started by former Finance Minister Pranab Mukherjee in his February2010 Union Budget. But the RBI has been dragging its feet: It issued draftguidelines in August 2011, invited comments and the matter has rested thereever since.

The RBI's major objection was that it didn't have enough powers to regulatethe new banks. The agency could remove an errant director, but if an entire

bank board connived in a fraud, it was helpless. Now Chidambaram hastaken away that excuse: The Banking Laws (Amendment) Bill, which givesthe RBI more teeth, was cleared by the Lok Sabha (the lower house of

Parliament) in December 2012, as a part of the government's new reformspackage. The RBI's reluctance stems from one major reason: largeindustrial groups are now allowed to acquire banking licenses. One of

the key reasons for the nationalization of banks was that many were

controlled by large business groups that used public deposits to finance

their own businesses. There were no Chinese walls and widespread

allegations of misuse of funds.

And the RBI is not alone with its reservations. "One of the real problems inthe financial sector is that there are issues of conflict of interest," Nobel

Laureate Joseph Stiglitz said while delivering the C.D. Deshmukh MemorialLecture in Mumbai recently. "And when you have corporates owning theirown banks, you are opening up a venue for corporate conflicts of interest."C. Rangarajan, chairman of the Prime Minister's Economic AdvisoryCouncil, has also advised the RBI to put licenses for conglomerates on the

backburner. The first choice should be applicants that are not part of biggroups, and only when these aspirants are found wanting should the RBIlook at corporate, Rangarajan told the Press Trust of India. The InternationalFund has also warned the RBI against allowing corporate entities into this

area.

After protracted debate andAfter a span of around 10 years RBI is set toissue fresh banking license. In 2003-04, it had last issued license to Yes
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Bank and Kotak Mahindra Bank . Prior to that, the central bank hadintroduced the first round of licenses to 10 private sector banks.

The Reserve Bank of India recently fueled enough optimism for India

Inc, mostly bruised with economic blues. They can now apply for

a new banking licence. The central bank released guidelines forthe same. Corporate CEOs were vying each other in airing their

voices to stake claim as potential candidates. Is it the need of the

hour?

The RBI guidelines give some criteria for eligibility, including that the entityapplying for a license must have "diversified ownership, sound credentialsand integrity" and a successful track record of at least 10 years. Groups withsignificant interests in real estate and capital market activities, which,

according to the RBI, "apart from being inherently riskier, represent abusiness model and business culture [that] are quite misaligned with abanking model," will not be entertained. The guidelines put the initialminimum paid-up capital at Rs. 500 crore (US$92 million) and restrictforeign shareholding in any form to 49% for the first five years. (Private

banks in India can have up to 74% foreign shareholding today.) Theguidelines also stipulate that 25% of the branches must be opened inunbanked rural centers and applicants should conform to meet the "fit and

proper criteria". However The final guidelines by the Reserve Bank made aclimb down from the initial stance, which in the draft norms issued in

August 2011, had virtually barred Realtors and brokerages from itseligibility criteria. "There are certain activities, such as real estate and capitalmarket activities, in particular broking activities, which apart from beinginherently riskier, represent a business model and business culture which arequite misaligned with a banking model," the draft guidelines had said.

But who are the new entrants likely to be? Given the RBI's reluctance toissue licenses to big business houses, those firms may not make the cut thistime. The frontrunners appear to be IDFC and L&T Finance, according to areport by Credit Suisse. The stock markets seem to agree. IDFC is now closeto Rs. 180 (around US$3.29) against a 52-week low of Rs. 94 (US$1.72).L&T Finance has more than doubled to reach Rs. 95 (US$1.74).The big

business conglomerates that want a piece of the action also include the
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Aditya Birla Group (Aditya Birla Financial Services), the Tatas (TataCapital), the Ambanis (Reliance Capital), Bajaj (Bajaj Finserv) and theMahindras (M&M Financial Services). Others include engineering giantLarsen & Toubro (L&T), SKS Microfinance (the only listed microfinancecompany), Life Insurance Corporation and Infrastructure DevelopmentFinance Company (IDF)

Many the prospective players have opposed the Problems of Going Rural.

That regulation according to them in particular makes matters moredifficult. As businesses penetrate the rural areas, the personnel costs becometoo high compared to the business generated. As fast-moving consumergoods (FMCG) companies have discovered, the salary of one person is often

higher than the profits generated by a whole cluster of villages.

"If the new banks are expected to do business with a client segment that ismuch less remunerative, it is going to put a larger burden on them," notes a,director of PricewaterhouseCoopers (PwC) India. "As it is, there is a lot ofcompetition and stress on the system where the larger players are concerned.The private-sector banks cannot afford to have a financial inclusion piecethat does not lead to a profitable business model. They have to put the two

pieces -- financial inclusion and profitability -- together. It cannot be one atthe cost of the other -- which is how public-sector banks have always

functioned.

Coming in the backdrop of the 2G spectrum scam, which was the outcomeof a clearly stated and far more detailed set of guidelines than what the RBIhas released after three years of consultation, one can only infer that thecentral bank has either learnt nothing from the unfolding and explosivegovernance challenges in India or it somehow believes that its reputation andinfluence over large corporates through the banking relationships that itoversees will force unsuccessful applicants to remain silent even if they have

been dealt with unjustly.

Even if banking licenses are not a scarce natural resource, the limitednumbers attach a massive financial value to the permission to operate.There is, therefore, every reason for corporate to exploit those portions ofthe decision-making procedure that are open to discretion, influence andinterpretation.


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Many financial advisory firms opine that Consolidation is more importantthan having more banks .

Recently in an interview the deputy governor of RBI Mr. Chakrabarty,When asked about the number of licenses that may be issued, the seniormost deputy governor said the number of new banks will depend on theeligible candidates and it is too premature to give a specific count now.

"First, let's see how many people are eligible, how many are fit and proper.If no body is fit and proper, then what is the use of giving licenses? This isall too premature...(to talk about the number of licenses to be issued the dygovernor. said.

On consolidation in the banking sector, Mr. Chakrabarty said the RBI

may come up with a paper addressing the concerns. If we are talkingof new banking licenses, then dont talk of consolidation. These are two

contradictory things. Consolidation is a defined issue. Some paper willcome out that may be addressing some of these issues, he said(PTI Feb 26,2013)

This shows that inconsistencies and contradictions inherent in statement ofgovernment and even reserve bank time to time on what should be

prioritized : consolidation, financial inclusion, and new bank licenses ?

India's Finance Minister, P. Chidambaram, wants more banks. So does thecountry's banking community and the financial sector but in the same breaththe government says government doesn't have the money. They state there isa need to rope in private entrants to motivate financial inclusion. And theregulator in charge of authorizing new financial institutions -- the ReserveBank of India (RBI) -- seems to be finally ready to open the floodgates. asmentioned above by the Dy.Governor of RBI financial inclusion, branchlicensing to corporate and consolidation are contradictory .

Added to this comedy of contradictions The most eye-catching is theproposal marking election 2014 for a public sector bank for women to berun by women, with a startup capital of Rs. 1,000 crore. The reason for thegovernment recommending issuance of new licenses to corporate as argued

by the government before is due to significant jump in coverage newbranches to augment financial inclusion which necessitates large


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investments and that the government doesn't have the money. Nor can thegovernment to dilute its stake. But new banks are therefore a must. But inthe budget speech the FM has enough money for opening up Rs1000crorecapital women public sector bank. mark these comedy of fascinatingcontradictions and pronounced inconsistencies, which we call it asConstipation of Thought& Media Diarrhea . Its official. Women are thenew vote bank, it seems. Finance minister P Chidambarams last budget

before the general elections next year lined up a slew of measures to helpwomen, showing that gender is increasingly becoming a factor in electoral

politics. The ministers 105-minute speech used the word women in theplural 24 times and in the singular, four times. The word gender occurredthree times, girl four times and female once leaving little toimagination on an emerging electoral priority of the UPA government as it

bets on inclusive growth.

Taking potshots at the all womens bank proposal, A twitter has rightly

remarked Chidambaram announces setting up an all-women bank. So be

ready to see a bank with mirrors, makeup kits and a shopping. Women are

someone whom men can bank upon.

This sums up the feeling of Indian woman who expected some direct-taxation linked relief and women banks(euphemistically vote banks !)in the budget which flattered.... only to deceive once again.

The banking industry will need to hire 9-11 lakh employees over the nextfive years, according to a report by Boston Consulting Group. Retirementsin public sector banks will continue to increase and peak by 2017. In total,1.8 lakh employees will retire and will be replaced. Depending upon the

productivity growth, the industry will need 2.5-4.5 lakh additional people forgrowth in business. Partner & Director, BCG, said Public sector banks willhave to double the current intake of employees to meet the talent needs offuture. unable to retain recruits and talents due to abysmally low salarystructure compared with peers the FM in the budget 2013 has assured Allpublic-sector banks have will all have ATMs in their branch areas by

2014and Banking correspondents will be allowed to offer micro-insurance products to customers.. In other words the FM agreeable toincrease capital expenditure in inanimate such as ATM and not on animatesand more reliance on flexible and contract labor than need based permanentrecruitment and adequate manpower planning arising on account of massiveretirements in four years. In plain terms the FM hints job cuts in public

sector banks to speed up consolidations.


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Hence in our opinion Budget 2013 has been prepared to please investors,not to fuel growth, employment and incomes. Budget 2013 continueswith the tradition of presenting numbers that have no value other than

what a short-sighted capital market wants to read into them pleaseforeign investors and international credit rating agencies. It is perhapsmore than time to downgrade the importance accorded to this annualnumber-crunching exercise. No other large country, developing ordeveloped, gives so much attention to the presentation of a budget,which in Indias case is all smoke and mirrors. This is not the end ofconflicting and confusing statements on budget, consolidation and

financial inclusion/licenses to corporate. These comedies of errors will

continue

Banking Amendments

The UPAs second stab at paving the way for an expanded presence ofdomestic and foreign private capital in the banking sector and the dilution ofgovernment ownership of public sector banks has moved one step forward,though after a compromise. The Lok Sabha has passed a revised version ofthe draft Banking Laws (Amendment) Bill, 2011 in which clauses allowing

banks to engage in commodity futures trading and exempting the bankingsector from scrutiny by the Competition Commission of India (CCI) have

been dropped. But there is much else that remains controversial in the bill,against which three bank employees union, AIBEA, BEFI, NUBE and oneofficers association AIBOA had decided to strike work onDecember20,2012. In fact, when the Finance Minister sought to take updiscussions on the bill in Parliament on December 11, the opposition stalled

proceedings and demanded that it be referred back to Standing Committeeon Finance the views and recommendations of which had been largelyignored in the draft. This occurred despite the fact that in an effort toneutralise the opposition, Finance Minister had met and solicited the

support of the two leaders of the opposition, neither of whom has displayeda strong distaste for banking liberalisation.

Much of the opposition, while crossing swords with the UPA on this issuefor political reasons, does not oppose the essential objective of the bill,which is to pave the way for consolidation in the banking sector under theaegis of a few domestic and foreign entities. There are a number of crucial


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changes relating to bank ownership and control that the amendment billproposes. First, the draft amendment bill as introduced in Parliament seeksto drop completely Section 12 (2) of the Banking Regulation Act 1949,which states: No person holding shares in a banking company shall, inrespect of any shares held by him, exercise voting rights on poll in excess often per cent of the total voting rights of all the shareholders of the bankingcompany. Scrapping this ceiling of 10 per cent on individual voting rightswould permit those shareholders holding a stake in excess of 10 per cent toexercise voting rights proportionate to their shareholding. Because ofopposition to the clause the bill as finally passed has decided to move onestep forward, while retaining a restriction on voting rights that is below theceiling on equity ownership. It states, in sub-section (2), the following

proviso shall be inserted, namely: Provided that the Reserve Bank mayincrease, in a phased manner, such ceiling on voting rights from ten per cent

to twenty-six per cent.

This may seem altogether appropriate. But the original clause has served toensure diversified ownership in private sector banks, which is crucial since a

bank is set up with minimal equity when compared with the deposits itmobilises from the public at large. Expanded equity ownership would allow

powerful shareholders with a small absolute stake to control a banksoperations and use depositors money to advance their own interests orengage in speculation. It was only with liberalisation, especially during theyears since 2005, that individual or groups of related shareholders have been

permitted to acquire significantly more than 10 per cent of total equity inprivate banks.

Second, the amendment bill seeks to revise a similar provision relating topublic sector banks under the Banking Companies (Acquisition and Transferof Undertakings) Acts, 1970 and 1980. As per Section 2E of that Act noshareholder in a public sector bank, other than the Central government, beentitled to exercise voting rights in respect of any shares held by him inexcess of one per cent of the total voting rights of all the shareholders. The

amendment bill seeks to raise this voting right limit to ten per cent.Third, the amendment bill seeks to render subject to RBI approval suchacquisition of shares by any person acting by himself or acting in concertwith any other person, shares of a banking company or voting rightstherein, which acquisition taken together with shares and voting rights, ifany, held by him or his relative or associate enterprise or person acting in


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concert with him, makes the applicant to hold five per cent. While givingthe RBI the right of approval the bill makes the process of acquisition of aninfluential stake in a bank transparent, it also provides the central bank theright to permit such acquisition on a range of grounds varying from publicinterest or the requirements set by international best practices. Withoutlegislative limits a policy of permitting private majority ownership would

be easy to implement when decided on by the government.

Finally, the earlier draft version of the bill had proposed that when

mergers and acquisitions occur, resulting in combination and possible

consolidation, the process should be kept outside the purview of the

Competition Commission. According to the original amendment bill,

nothing contained in the Competition Act, 2002 shall apply to any

banking company in respect of the matters relating to

amalgamation, merger, reconstruction, transfer, reconstitution oracquisition. In essence, if as a result of approvals granted by the RBI

(whether influenced by the Finance Ministry or not) a process of

consolidation begins, that would be unstoppable. Fortunately this

change has been blocked and the clause dropped, though the effort to

allow mergers without scrutiny is bound to continue given the UPAs

obsession with creating two or three banks comparable in size to

leading global banks.

The implication of these moves is clear. While the revisions discussedabove are embedded in an amendment bill that also seeks to strengthen theRBIs regulatory control over cooperative banks and such otherinstitutions, the former rather than any other revisions being proposeddefine the principal objective of the bill. This is indeed a major shift in

policy reflecting the victory of the liberalisers in government over theregulator (the RBI). It is important to recall here the earlier view of theReserve Bank.

The RBIs Report on Trend and Progress of Banking in India, 2003-04

(Chapter VIII: Perspectives) states, The concentrated shareholding inbanks controlling substantial amount of public funds poses the risk of

concentration of ownership given the moral hazard problem and

linkages of owners with businesses. Corporate governance in banks hastherefore, become a major issue. Diversified ownership becomes anecessary postulate so as to provide balancing stakes.


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An instance that illustrates the conflict between the RBI and thegovernment in the past is the saga surrounding a relatively small bank, theCatholic Syrian Bank (CSB). In 1994, Surachan Chansri Chawla and hisBangkok-based Siam Vidhya Group, had acquired 36.18 per cent equity inCatholic Syrian Bank. This private transaction between Chawla and the

bank was subsequently approved by the bank's board. The proposal for theacquisition of a stake in CSB by the non-resident Chawla was alsoapproved by the Foreign Investment Promotion Board (FIPB) and theCabinet Committee on Foreign Investment in early 1997. However, theRBI rejected the Siam Vidhya group's request to transfer the bank's sharesto its name. This was because, under the bank ownership norms of theregulator, no single entity can hold more than 10 per cent of total equity inany Indian bank. They were then held in "trust" by the bank and Chawlachallenged the decision in court. After much litigation, the Supreme Court

had directed the RBI to grant permission for the transfer of shares to thegroup subject to the condition that it would divest 26.18 per cent shares,after retaining about 10 per cent with it, on or before August 1, 2008.Following the directions of the Supreme Court, the group did divest itsexcess stake after some delay.

In recent years the government has in a number of cases allowed theacquisition of equity in excess of 10 per cent by single investors in some

private banks such as ING Vysya. The amendment being proposed wouldthus serve multiple purposes. One would be to legitimise prior holdings ofmore than 10 per cent equity and permit these investors in private banks toexercise voting rights proportionate to their stake. The second would be to

permit acquisition of other private banks by new investors, domestic andforeign, on the grounds that these banks need to mobilise capital tostrengthen their capital base, to meet the revised Basel III capital adequacynorms. And, the third would be to gradually apply the same principle to the

public banks, in whose case spokespersons from both the government andthe RBI have declared that they need to go to market to raise additionalcapital. In sum, the objective of the bill is clearly to permit new entry,

consolidation and expanded foreign presence in a sector that is the repositoryof much of household saving in the country.

For the government the process of freeing entry and control in the bankingsector has been a long and painfully slow process. It began as far back as2004 when the Ministry of Commerce announced a set of decisions withreference to foreign investment in the banking sector, which set the cap on


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foreign equity in Indian banks at 20 per cent in the case of public sectorbanks and 74 per cent in the case of private banks.

Consequent to the Ministry of Commerce announcement, the Reserve Bankof India issued a comprehensive set of policy guidelines on ownership of

private banks on 2nd July 2004. These guidelines stated among other thingsthat no single entity or group of related entities would be allowed to holdshares or exercise control, directly or indirectly, in any private sector bank inexcess of 10 per cent of its paid-up capital. Recognising that the earlier 5thMarch notification by the Union Government had hiked foreign investmentlimits in private banking to 74 per cent, the guidelines sought to define theceiling as applicable on aggregate foreign investment in private banks fromall sources (FDI, Foreign Institutional Investors, Non-Resident Indians).

However, in the interests of diversified ownership the 2004 guidelines haddeclared that no single foreign entity or group could hold more than 10 percent of equity. There was also a 10 per cent limit set for individual FIIs andan aggregate of 24 per cent for all FIIs, with a provision that this can beraised to 49 per cent with the approval of the Board or General Body.Finally, the 2004 guidelines set a limit of 5 per cent for individual NRI

portfolio investors with an aggregate cap for NRIs of 10 per cent, which canbe raised to 24 per cent with Board approval. In keeping with its morecautious policy, however, the RBI decided to retain the stipulation under theBanking Regulation Act, Section 12 (2), that in the case of private banks themaximum voting rights per shareholder will be 10 per cent of the totalvoting rights. The 10 per cent ceiling on equity ownership by a singleforeign entity was partly geared to aligning ownership guidelines with therule on voting rights. Moreover, there is a cap on voting rights for individualinvestors set at 10 per cent for private banks and 1 per cent for public banks.

This is the policy that the government has sought to change since 2005 andto legislate into law. It has now partially succeeded. The major opposition

party through its former Finance Minister Yashwant Sinha found a rather

less significant and dilatory reason to demand the return of the bill to theCommittee on Finance. The bill if passed, he argued, will allow banks totrade and speculate in commodity futures markets. But that is hardly themain thrust of the proposed amendments to the banking regulation act of1949. So the government partly relented and dropped a couple of clauses, inorder to push through a bill that would substantially liberalise regulation ofthe banking sector.


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Merger of Banks:

It has been widely reported about the proposal to merge some of the PSU

banks (Nationalized banks). These merger has been proposed by thegovernment, specifically our Finance Minister P. Chidambaram. In theannual banking summit, the finance minister reiterated this by saying that

banks should not fear consolidation and that for being a world economicsuper-power or for at least being one of the three largest economies, India.

The centre is nudging the capital infusion demand by the state-run bankswith demands for mergers as these mergers would considerably bring downthe liability on the centre for capital infusion. Currently the centre has a

commitment of Rs 15888 crores of capital infusion towards state run banksto maintain the financial health of the state run banks. Over the next fiveyears it would have to take the burden of another Rs 90000 crores for thesame.

The justification of the need for large global sized banks given by the centrewas that these banks could have a larger asset base as their exposure tovarious sectors would be widened and their scope for financing bigger andlarger projects would undoubtedly increase. Certainly the centre is adoptingthe policy of looking towards the west and drawing some inspiration out

their ways. In the financial debacle of 2008, the world has witnessed howthe so called global banks of USA and Europe are still gasping for breath.Ultimately many of these financial institutions and banks had to be takenover by others or had to be bailed out by the government through therespective central banks by providing grants and soft loans. Even the biggestof banks in the world, Citibank, was not spared by the recession. The state ofthese banks were as a result their own making and not because ofcircumstances that they had to bear the brunt. Indian banks have a largecustomer base and undoubtedly large amount of public money is involved. A

larger loan exposure would only put the public money in unsafe domains.The more fragmented the banks are, the lesser will be the exposure w.r.t. tosize, thus making public money secure. We have already seen how the banksare reeling under pressure because of their exposure to the aviation, powergeneration, infrastructure, mining and agriculture sector. The banking sectoris the pulse of the economy and decisions should be taken by keeping thelong term implications in view. Even the slightest of jerks in trying times


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could prove fatal for the economy. Further more in this regard, theseproposals are being mulled upon to create 2 or 3 global sized banks. Withoutdoubt, the sizes of banks are being compared by keeping in view their loan

books and their asset base. But what the minister is forgetting is that we gotto compare apples for apples. If we are to compare the size of our banks withthat of the US, converting our financials in terms of dollars and making a pieto pie comparison would be utter foolishness. With my limited knowledge ofeconomics and with due respect to our finance minister, it isnt rocketscience to understand that what 1 dollar means to an American is not what 1rupee means to an Indian. We got to factor in the purchasing power of boththe currencies in their respective economies for the corresponding averagecitizen of that country before making any comparison. Appropriateweightage should be given to this aspect in any exercise of comparing sizeof banks in each of these economies. Moreover it will be pertinent to note

that the penetration of the Indian banks by their sheer enormity of the reachtheir customer base is something unparallel world over (SBI being the casein reference). One has to definitely give due consideration and weightage tothis fact and not merely be guided by size of loan book and enormity of assetwhile considering the size of a bank. Thus all these points all the more makeit unreasonable and unfavorable for the centre to even think about merger of

banks. Apart from all this, the points being raised by the respective unions ofall these banks are also to be considered before making any commitments. Itwould amount to nothing but digging our own grave or to put it more bluntlywe would be cutting the hands and legs of the workers who built our veryown TajMahals upon which our economy is sustaining and I sincerely hopethat our finance minister wouldnt want to take the wrath of being termed asHarahan who made all this happen.

Another very important point of consideration is the proposal of divestmentof the PSUs including the nationalized banks. No doubt it is impertinent thatthe government meets its fiscal demands and divestment of holdings is oneof the most easiest and non-cumbersome ways to meet this end. But theunique, never-before tried out model which the centre plans to adopt in the

process of divestment is alarming. From what we understood of what wasreported in this end is that the centre plans to sell the stakes of these Bankingand other PSU stocks to selected Asset management companies (AMC) andmutual funds, and these mutual funds AMCs in turn would create a specialcategory of securities where in these securities would derive their value fromthe value of the basket of these PSU stocks. These securities thus createdwould be issued to the public as units of exchange traded funds (ETFs) listed


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in the stock market through these mutual funds in the name tradable listedETF units. The fact that the underlying value of these securities would bederived from that of the PSU stocks which are listed in the exchanges wouldgarner a lot of interest in the common public, who are generally unaware ofthe ways of the market. This would be so because it is generally understoodthat PSU stocks are considered to be safe havens of investment for thecommon man and has a huge upside as it linked to the economy. India being

projected as the next big economic super-power and a force to reckon withwould furthermore add to such an understanding of the public. Keeping the

present proposal in mind, the only earnings out of the securities that themutual funds and AMCs would issue would be out the dividends that thecompanies (underlying stock/PSUs) declare and the capital appreciation ofthese stocks. How often would these companies declare dividends is aquestion which only time can answer and whether these stocks would ever

see any capital appreciation is a question which can, to a large extent beanswered by us. Such a possibility is certainly shady. Because the catch isthat, the stocks of these public sector undertakings most of which are alreadylisted in the exchanges do not reflect their true price. Their values on theexchanges are not reflective of their true value which ideally should beascertained by market forces. It was already very well seen how the marketreacted to the offer for sale of a few PSUs which were divested. Even thoughthose stocks were being offered at a discount it did not garner much interest.There was hardly any buying for the better part of the period of the tradingwindow. Towards the fag end of the trading window, it was LIC which tooka lions share of the offer for sale, thus being a saving grace for thegovernment. Seasoned Market players probably knew about the intricaciesof these stocks. And that is why it did not garner much interest even thoughit was being offered at a discount. Even in the case of the proposeddivestment of PSUs through AMCs it would is highly doubtful that it wouldsee an upside resulting in capital appreciation since the values are alreadyfabricated. The reasons for such artificial prices are the low public holdingor free float of many these shares. Probably the government does not want toface the same situation and that is why they have devised this new structure

where in a mutual fund AMCs would act as an intermediary between thedivesting government company and the common public. Ultimately thefiscal needs of the government would be satisfied, the mutual funds wouldhave made their money but it would be the common that would have losttheir hard earned money. The average middle-class and those planning fortheir retirement would without hesitation enter into such a fund. And after afew quarters of capital stagnation when they decide to encash out of it they


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are bound to face the road block of not even fetching the face value/purchase value of the units held by them thereby leading to a downwardspiral in the value of these units when these mutual funds face redemption

pressure. This is the same model which was the prequel leading to theNovember 2008 financial debacle where the securities, which derived itsvalue from underlying sub prime loans, were being issued as highly secureand AAA rated securities to the average American. They innocently enteredsuch funds as a lucrative substitute for pension funds and got trapped.

Furthermore, the next initiative which the government plans to take in thebid to open up the economy and make reforms is the opening up of thepension sector. The dual combination of opening up of pension funds andallowing pension funds larger freedom to invest in equity and equity basedsecurities and the so called seemingly innocent act of offering these ETFs

which has the wide acceptance and belief of being safe simultaneously bythe government is the most dangerous cocktail which has the potential ofleading to catastrophic results which is likely to affect scores of millions ofunassuming individuals, especially senior citizens and pensioners, the mostvulnerable of any society.

In order to understand the incentive driving the ministry of finance

and the various interests pushing it, it is useful to distinguish between

the activities of banks as seeding-cum-cultivating agents and as

harvesters on the one hand, and the activities of modern banks as over-time seekers of interest from customer activities, and their activities as

point-of-time earners of fees. Bank mergers, like many other types of

liberalization directed at increasing the wealth of rich shareholders has

been a tsunami originating in the activities of US financial corporations.

Their role has been that of a harvester of fruits of other institutions

seeding and nurturing activities, and of looking for product lines

involving fees for point-of-time services rather than of durable customer

servicing activities. They generally provide usual banking services only

to an elite band of up-market customers with whom they have sought to

build close relationships.

The 2008 global financial crisis, resulted in the threat of total collapse oflarge financial institutions, thebailout of banks by national government. Theirony has not been lost on those in the banking industry in this country.Former Prime Minister Indira Gandhi was roundly condemned by the USand other Western powers when she nationalized banks in our country in
http://en.wikipedia.org/wiki/Bailouthttp://en.wikipedia.org/wiki/Bailout


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order to ensure that credit reached the poor and powerless. Deemed to be asocialist - or communist-like measure -, it has now been adopted without anyqualms by the avowed world leader of free market economies. It seems theUS government had little choice, as otherwise widespread mayhem mayhave resulted for the average citizen both within US and abroad. Clearly therules of the game change for Western economies during crisis.

Nationalization can be resorted to when the American people need to beprotected but the same measure can be decried when a developing economyneeds to do so to similarly protect its far more impoverished citizenry. Whileday in and day out, the Finance Ministry is assuring the people in the contextof global financial crisis that Indian Banks are safe, but they should behonest enough to emphasize the truth that 85% of the Banking in India isdone through Public Sector Banks and it is because of Nationalised Banksthat the crisis has not engulfed in Indian Banks.

Have government forgotten the social objective of banks completely?

Is it possible for a government to survive by discarding the interest ofcommon- men, farmers, small traders in India?

Is it necessary for India to have bigger banks to extend credit to farmers andsmall traders who together constitutes 95% of population and without whosesupport even economic viability of large projects would be at stake?

It is important to mention here that there is sharp rise in loan portfolio orvisible growth in advances of banks in general is not due to financing made

by banks to small traders and farmers but only due to bulk financing made tobig corporate houses, to real estate developers and to infra structuredevelopers.

Does any one in the government or in RBI mean that by merger andenhancing powers of banks, there will be equitable GDP growth in countrylike India?

Even in America where big banks are many, one out of every sevenAmericans starves and struggle for earning their bread and butter for at leastsurvival. In India the position is worse than that in USA. In India nine out ofevery ten Indians are unable to earn sufficient money even for respectfulliving. Considerable large proportion of Indian population is suffering frommal-nutrition; they die of curable diseases in want of proper medical


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assistance and they remain unemployed in want of adequate opportunities.This is India where even federal structure of the country is at stake due tolargely growing unemployment. Besides in majority of villages, small townsand cities there is no proper sanitation facilities, acute scarcity of water andelectricity, crisis for medical treatment and what not. This is why I reiteratethat Indian environment is different from other developed nations and henceneed unique treatment.

It is worthwhile to add here that USA government have realized after fall ofbig banks and financial Institution during last year that management of bigbanks is very difficult compared to smaller ones. Still there are about 8000smaller banks functioning in USA to serve common men. It is also true that125 banks became bankrupt or closed their shutters during the current yearin USA.

If we talk of India we have less than 30 public sector banks and they are saidto be in better health position. They are well scattered in every nook andcorner of the country to serve Indians in general. They have to beencouraged to extend maximum help to small borrowers. They cannotextend any better help to poor person after merger of banks. Then what is theneed of merger and acquisition? Why is government bent upon merger Needof the hour is to make them able to cater to the needs of common men.

Even if we leave aside the social objective, it is not commerciallyproposition to build pressure (frequent request by FM or RBI is enough tobuild pressure) on banks to go for merger and acquisition especially whengovernment have granted economic freedom to individual banks in the era ofeconomic reformation, liberalization and globalization When need will arise

banks will themselves strive hard to grow bigger to survive. As of nowbanks in India are said to be safer than foreign banks. Even government hasadmitted it repeatedly. Need of the hour is to strengthen the existingstructure of banks, make them more and more efficient and enthusiastic.Government should make efforts for repayment of loan and for this purpose

make water tight laws to ensure cent percent recovery of loan from willfuldefaulters so that proportion of dead money in banks balance sheet comesdown and they can afford and generate will to make finance to commonmen. Present scenario is that branch manager of every banks branch isafraid of extending credit to small borrowers in fear of account going badand lastly added to Non Performing Asset. Need of the hour is to avoid

political intervention in banking affairs and to resort to healthy norms for


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financing without any fear of target achievement. To add fuel to fire everybanks are suffering from staff shortage and as a consequence there is nomonitoring on existing borrowal accounts and gradually service quality in

banks at many branches is deteriorating in want of adequate staff. Banks areeven unable to redeploy the existing surplus staff at Metro branches due to

protest from powerful employees union.

Last but not the least; bitter truth is that big business houses are getting allsorts of help from the government, from the banks and from all corners butall at the cost of poor and middle family. Rich business houses are

producing, hoarding and realizing maximum profit on their products and itwill not exaggeration to say that the present trend of rising price is caused bythese profit makers only. Government has been making promises and

promises to control price, but always fail on this front because they have

given undue freedom and undue privileges to these business houses. I hopegovernment will make all best efforts to give relief to general mass who aresubjected to unbearable pain on account of sharp price rise in allcommodities without proportionate rise in their monthly in Can merger andacquisition by banks help in ameliorating their problems of poverty riddenIndians? I would like to draw the attention of learned FM and PM that lateIndira Gandhi (Congress Party) had nationalized banks because private

banks were hesitant to extend credit to common men, villagers weredeprived of banking facilities and common men was afraid of even enteringin to bank. Private Banks were exploiting not only staff working in the banks

but were also exploiting business houses. Indira Gandhi is remembered inglobal financial crisis. In a reversal of its recently held position, theCongress party has declared that publicly owned banks are one of Indiasstrengths and that the nationalisation of banks was one of the partysimportant achievements. This has, as expected, upset those who havesupported the partys two-decade long flirtation with financial liberalisation,which included an as yet unfinished drive to privatise public sector banks.

The declaration was first made by United Progressive Alliance chairperson

Sonia Gandhi at the Hindustan Times Leadership Summit. She argued thatwhile the ongoing economic upheaval could grievously affect the mostvulnerable sections of our society, her party had partially insulated Indias

poor from becoming victims of the unchecked greed of bankers andbusinessmen. Elaborating, she said: Let me take you back to IndiraGandhis bank nationalisation of 40 years ago. Every passing day bears outthe wisdom of that decision. Public sector financial institutions have given


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our economy the stability and resilience we are now witnessing in the faceof the economic slowdown.Coming from the Congress party chief a time of last elections election time,this could have been dismissed as mere rhetoric that is unlikely to influence

policy. After all, the United Progressive Alliance chairperson had noted inthe same speech that, the response to the economic slowdown resulting fromthe crisis should not be a return to the era of controls. But the cynics weresurprised when just days after Sonia Gandhi made her remarks, then FinanceMinister P.Chidambaram took the cue from his leader and extolled thevirtues of a nationalised banking sector. Speaking at a function organised as

part of the M. Ct. M. Chidambaram Chettyar centenary celebrations, heemphasised that Indias public sector banks were strong pillars in theworlds banking industry. So It will not be exaggeration to predict and say

that the same Congress Party under the banner of UPA is dragging bankingindustry in pre- nationalization era.

Please keep in mind that during reformation era 23 banks were forcefullymerged to bigger banks by government of India because they succumbed tomalady and irregularity they accumulated , ant not because they were small

banks. In this regard we bring your attention the fourth, and most important,question posed in the discussion paper put out by the Reserve Bank of Indiain August 2010 examines the pros and cons of the 'Entry of New Banks inthe Private Sector' is "whether large industrial and business houses could beallowed to promote banks". The Indian licensing guidelines of 2001 do notallow "large" industrial houses to sponsor new banks.

The reasons go back to the dubious practices of such banks directing creditto preferred borrowers prior to bank nationalization in 1969. All thedisadvantages of allowing industrial houses to sponsor banks are as validtoday as before.

Among major economies, Canada the United Kingdom, Germany] and

France do not bar industrial companies from promoting banks.

In contrast, the United States does not allow industrial houses to own banks.It is evident from the dispersed nature of past banking sector breakdownsthat permitting industrial houses to own banks or disallowing them was not agood indicator of whether banks would need government back-stop fundingassistance. The fourth, and most important, question posed in the paper is


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"whether large industrial and business houses could be allowed to promotebanks". The Indian licensing guidelines of 2001 do not allow "large"industrial houses to sponsor new banks.

As the RBI paper has suggested, the probability of industrial housesinterfering in banks promoted by them could be reduced by restricting

banking licenses to companies with diversified ownership. The downsiderisk is that it may be practically impossible for RBI to prevent crony lending

practices. Consequently, it is for RBI to assess whether, at our current stageof development, it can consistently monitor bank lending and stand up to

pressures from corporate oligopolies. Consequently, we need to assess ifperiodic banking sector crises are inevitably linked to business cycles orwhether they are more influenced by unconstrained and under-regulatedgrowth of the banking sector as compared to the rest of the economy.

For example, the banking sectors in the US, the UK, Iceland, Ireland, Cyprusand regional savings banks in Spain are significantly oversized and/or over-leveraged. It is high time to reflect on the received wisdom that more is goodin banking since this promotes growth. RBI should take its time to reassessoutstanding levels of household, corporate and public internal and externaldebt, sectoral growth of credit and preferred size of the banking sectorversus that of the economy before issuing licenses for the entry of new

private banks. In a study, ASSOCHAM assumed that if all 27 public sectorbanks are merged, their capital base would be just $3 billion, which standsnowhere against the capital base of $20 billion of a single entity in China Industrial Commercial Bank of China.

Going by the comparative figures that are available of US even as of 2005, ifwe add up today figure of Nationalized Banks India with US even merger of19 nationalized banks is not going to create a new entity of internationalstatus.

Even SBI is not even one-tenth the size of the tenth largest bank in the

world. But this also means that no amount of consolidation will give Indianbanks a globalsize in the foreseeable future.

The argument Bigger size is needed for scale economies as being advancedby the Finance Ministry fall on four legs as scale economies are useful butbeyond a certain size, the benefits of scale taper off and tend to be offset by


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growing complexity. Internationally, studies have shown that a size ofaround $ 20 billion is optimal. Indias top ten banks meet this sizerequirement.

One outcome of the present global crisis is that largebanking monsters havecome to be feared. The world's largest banking group viewed under many

parameters including profitability is the Citigroup. An outstanding exampleof a financial services group that grew through M&As, the bank has beenasked by the Federal Reserve Board to desist from further acquisitions untilit refined its systems and procedures. If a bank such as the CITI, which has

been a global force, could be faulted on its basics, there is clearly a messagefor Indian PSBs to be far more circumspect than what the Governmentwould recommend. Some of the worlds biggest banks, the Citigroupnotably, which relied heavily on mergers and acquisitions to grow

phenomenally, have been rapped on the knuckles by the regulators and arerealizing that such stupendous inorganic growth has come at a price. But InIndia, there is a revival of the clamour for bank consolidation disregardingthese adverse trends

Besides, universal banking itself seems to be going out of fashion. In Indiait is unlikely that banks will be able to impress all their customers across avariety of products. A deficiency in one area, not necessarily its main

business, can affect its image disproportionately. Even more damaging is thefact that M&As can bring in disparate cultures that cannot be harmonisedsimply because of common ownership. . India needs expansion of bankingand not consolidation of banks.

The access to finance in developing countries has been considered as anecessity just like safe water or primary education. But in India 41 per centof adult populations do not have access to banking services. So the questionswe need to ask: is consolidation going to meet the developmental needs ofunbanked regions in India, as there are 391 under-banked districts (out of atotal 602 administrative districts) in India? Is it going to augment the reach

of the banking system to millions of Indians citizens who do not have bankaccounts? Given the fact that the average private banking customer can beten times more profitable than the average mass-market retail customer, it ishighly unlikely that the commercial interests of consolidation would matchwith the developmental needs of unbanked regions of both India. What isneeded is branch expansion and not consolidation retaining the ethnic,federal structure and identity of existing nationalized banks
http://economictimes.indiatimes.com/opinion/columnists/t-t-ram-mohan/Beware-of-bank-consolidation/articleshow/5020322.cmshttp://economictimes.indiatimes.com/opinion/columnists/t-t-ram-mohan/Beware-of-bank-consolidation/articleshow/5020322.cms


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At a time when policy makers are still after mega-mergers among publicsector banks, notwithstanding the failure of big banks globally, keeping bankmergers out of the purview of the Competition Act is unethical and pro-cartelization.

The Government, the RBI and a section of bankers are for the merger ofassociate banks with SBI and consolidation of 19 nationalized banks to 6 asmentioned above . Is this not creation of monopolies? By downsizing,cost is sought to be reduced. The real intent of consolidation is downsizingPublic Sector Banks (PSBs) in terms of manpower and Branch-network tofacilitate easy privatization. This is cartelization in Banking Industry and todevelop synergies in functioning and ultimately to take step for merger. It isa prelude to merger. Now banks have also started to explore possibility offorming such alliance. Most of the bank employees are opposed these moves

as this is also one form of cartelization precursor for consolidation i.e.,forming an alliance to deal with a business. By their very nature, bank orfinancial service entities are people-centric. It is not clear whether those whoadvocate mergers as an easy option are aware of the strengths of such humancapital.

But in a country such as India, with 60 per cent of the populace financiallyexcluded and only 5 per cent of villages with banking facility, bank mergersfor pooling capital and big loan disbursements will not serve nationalinterests.

And this plan of bank mergers is part of a larger design that includes sellingmajority shares of PSBs to private entities, major foreign equity

participation and outsourcing of basic banking services. The bankingamendments approved by the parliament recently would compel all Indian

banks to follow global power corridors, losing their sovereign entities.

According to a report from Reuters on the December 06, 2012, the top tenbanks worldwide have together cut as many as 1,50,000 jobs since July this

year. Does the government wants our banks to follow the footprints of theseworld leaders in the liberalized environment The bill is dangerous for theexistence of public sector banking system as also for the maintenance ofindigenous& federal character of public sector banks.

That is why the situation is serious. The above amendments should beopposed tooth and nail, otherwise the Public Sector Banks which have


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played a very important role in the economic development of the country,will be poached by the corporate capital and Foreign Investors.

The fallout of these amendments will be on the common people, who solelydepend on the Public Sector Banks for their financial needs.

TO BE CONCULDED

AN APPEAL

Dear friendsAfter several days of studies and research, collating relevant information, ,united in spontaneous emotions against ill-advised banking reforms, guidedat the best by vague optimism, dissipating lack of perspective and constant

lulls of despair, I ventured to write this series merger mania . I am glad toinform you that this series is coming to an end with this article merger maniaVIII.Given the democratic polity that we have in India we need to educate our

public mind on vital issues to enable them to make right choices at all levels.No democracy can afford an ignorant public mind. An ignorant public mindis more dangerous than an invading army. The true defence of democracy isinformed public opinion. Our people should be educated on issues ofconsequences. As they hold the sovereignty and elect their representativeswho shape their course of their destiny, awareness about vital issues ofsocioeconomic life of the nation is indispensable. Rightly said, attitudesare more important than facts. Lincoln was right when he said that nothingcould succeed without public support and nothing could fail with it. Indianeconomys midnight hour is here. India is rediscovering herself under a neweconomic paradigm. This has brought us all under a massive socio-economictransition that is essentially painful.

We, the nation, must understand and oppose it with all our forces incommand this rather wrenching phase of transition of banking reforms to

tame its ill effects. The issues are essentially confusing and common peoplesimply do not understand them. Companies in hundreds are getting closeddown, many companies are being privatized. This is causing loss ofemployment. We all hear the talk of Job less growth, Labour displacinggrowth, etc. The air is replete with terms like new Economy, GlobalRecession, Stagflation, demand pull recession, etc.


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That is why people must understand the vital issues of ill advised bankingand their possible consequences. This understanding must go beyond short-term benefits. In fact, ours is a democracy of the illiterates. Very few seemto be discussing critical issues facing the nation. Most of the time our

politics is misfocussed or trapped in non-issues. This is lethal for the futureof the country.

Sadly, our media too is not paying required attention to educate our publicmind against the mendacious designs of these banking reforms which isaffecting the common man- aam admi. There is definite need to go beyondreporting. Given the massive, pervasive illiteracy there is an urgent need toeducate our public mind under an all-out effort on war footing.

Nothing is more powerful than an informed public mind able to take quick

decisions of consequences. The aped , failed theories, medicines prescribedby IMF and the west repeatedly aped as banking and installing classbanking to suit a few privileged corporate cliques by the successivegovernment giving a go bye to mass banking must be demystified,exposed and should made easy for the common man to understand it sideeffects and put to use. At last, everything boils down to economics.

Even those who invest their hard earned money in public sector banks forsafety and security also do not understand evil machinations of these ant-

people banking reforms. . So there is imperative need to take up upon theseissues to educate the public mind and explain vital concepts against peoplesinterests of the so called banking reforms beyond jargon to people. In thisregard NUBE strived to make some humble, modest attempt in bringing toquip scorers of readers, public mind to understand many issues and demands

beyond bank portals, unions charters & borders touching the chord of civilsociety, trade union/social activists, students, journalists and the public alike.

That is why one again NUBE has taken up upon itself to educate the publicmind and explain this time the issue of consolidation of banks to people. In

the coming years NUBE will be coming out with focused books, specialpapers, etc. by organizing seminars and workshops to rally support of thewider sections of the society in opposition to consolidation of public sector

banks in the it nests of the people.

This merger mania series is for all. The objectives of this series is to enablepeople to understand important concepts in economics, banking, jargons of


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consolidation , etc. and to get insightful understanding of changingeconomic environment and impact of Liberalisation, globalisation,

privatization on our lives.

In this venture of ours we are Grateful to all the personalities, for theircontributions and to all friends of the people known and unknown who have

been responsible for the success of this edition; who have not claimedintellectual property rights whose noble objective is to reach information tomore and more people.

Bank unions alone cannot fight these unwarranted economic & bankingreforms. But People can, and must, for own sake , for economic activity ismade in political terms people and people alone are the motive forces in

halting , reversing needless banking reforms hurried in a breakneck speedby the successive governments .

But sadly while sincere efforts were made mail this merger series to mostof the unions in the Indian banking industry from the email contact addressdisplayed in their respective website , none have cared to evenacknowledge, leave offer their comments or upload in their site. Butnevertheless we still continue nurture the conviction that none of us isabove all of us.

Viewed in this context and trends NUBE expresses its eternal gratitude to http://www.allbankingsolutions.com/

http://importantbankingnews.blogspot.in/

http://mitalismusings.blogspot.in/

for uploading this series and giving the coverage, recognizing theimportance of the issue with no axe to grind. They have published thesearticles without excepting any favour except warmth of the love for the bankemployees movement. They have placed us in their debt permanently.These sites having been doing splendid job in orchestrating the aspirations

and hopes of average bank employees, calling spade a spade, with thesymphony of their rhythms matching the expectations of the ordinary

banker, in the process kindling vibrant, alternate space for them to voicetheir opinions without fear or favour . I have no qualms of compunction inadmitting in any forum that these noble, pro- bank employee sites haveemerged as the crusader to many average bankers as could be seen from thenumber theirviews/reads in their respective sites that they can be called as
http://www.allbankingsolutions.com/http://importantbankingnews.blogspot.in/http://mitalismusings.blogspot.in/http://www.allbankingsolutions.com/http://importantbankingnews.blogspot.in/http://mitalismusings.blogspot.in/


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average bankers news laundry. Whether we are exalted are decried formaking this statement in public domain we dont bother. we answer to thecall of our conscience .

While writing this series , I am appalled to note that many project reports ofgraduation courses and business schools on consolidation are mostly cut

paste predetermined documents advocating consolidations as the panaceafor be all end all for evils plaguing the banking industry in India .Many ofthem will become prospective banker taking into account the massiveretirements in another four year time in the banking industry in India . Withtheir focus skewed in favour of consolidations in their project reports, willthey support anti consolidation campaign of ours is the lurking fear wenurse? If these articles changes their mind set and ignites their imaginationsto think alternates from the fixity of dogmas and views in our educational

curriculum and they present in future articles, reports embracing truth andground realities ,and the new recruits grasp the politics of mergers ,we candraw satisfaction that we have together made a new beginning inreengineering of mindsets of graduate and business schools students, whichwill go a long way in strengthening bank employees movement .We have made some humble attempt in bringing out this series to quip

bankers, public mind to understand the consequences of consolidations ofpublic sector banks. I trust this series will touch the chord of trade unionactivists, students, journalists, civil society activists,, and other widersections of the society and the public alike and invoke their support,retaining the identity nationalized banks in the interest of people of our greatnation.The genesis of these articles merger mania 1 to 8 lay in the long felt needfor compilation containing an authentic and updated materials drawn fromvarious resourceful materials on this crucial issue . . I do not claim anyoriginality. There may be some gaps in between. But, nevertheless, I hadtried to cover many dimensions and definitions in globalisation, banking andeconomic basic literacy jargons.Any part of this book may be freely reproduced in any form by any

organization. But we would appreciate the copy of material is sent toour office with comments for furthering our knowledge. In preparing

these documents I had infringed on the intellectual property rights of

several individuals and also various resourceful documents, books in

good faith with the hope that authors of these documents oppose

patenting of intellectual property rights and they oppose IMF, WTO

dictates. We term IPR as RIP (Restriction on Intellectual Progress).


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We hold the conviction that right to information is directly linked with

bringing truth to light. Information is power and documented

information is democracy.

We intent coming out with a book against consolidations of consolidatingyours valuable suggestions and feedback. We shall be highly obliged ifsome of you can help us with cartoons depicting the kernel essence of eachserial. It is with this objective we have requested the sites to upload thesearticles in public domain. Kindly help us with your feedback comments tothe above mentioned sites or [email protected].

Unity- Struggle - Unity is the lessons we have learnt. Unity and solidarity isthe raison dtre for survival of unions in the banks in wake of themendacious merger moves of the Government.

Defend Public Sector Banks!

Deflate Consolidation Myths!

Defeat Consolidation among Public Sector Banks!

Consolidate unity!

Unity- Struggle Unity-Victory

Thank you

S.SRINIVASANPRESIDENT

NATIONAL UNION OF BANK EMPLOYEES

Merger Mania 8

Documents

Transcript of Merger Mania 8