Merger of banks is not a simple exercise as there are several factors and each bank has a character of its own. Public sector banks are created out of public money. These entities are therefore duty bound to extend all types of services to customers across categories. No doubt, merger of one weak bank with strong one or merger of two weak banks is said to be the faster and less costly way to improve profitability. Managing the merged entity by the management teams drawn from two different banks is also a difficult task improving the quality of management is yet another challenge for banks. There is every danger of merger derailing the steady improvement in the health of Indian banking system that has taken place consequent to banking sector reforms. The need of the hour is strengthening existing banks and branches, making them a hub of all services.
(The views expressed by the author in the article are his/her own.)
