Virtually half of the Indian public sector lenders — 10 to be exact, which will likely be merged to create 4 banks — are on the point of amalgamate themselves in an train that takes impact from April 1.
The mergers, introduced in August final, will begin amid an unprecedented nationwide lockdown to battle the speedy unfold of COVID-19.
Banking companies are exempt from the lockdown, however are working with minimal employees at branches with curtailed enterprise hours, primarily focussing on important companies equivalent to withdrawals and deposits. Banks are encouraging prospects to utilize their digital platforms for transactions.
“The entire focus right now is how to continue the essential services to customers with minimum staff,” stated the chief government of a public sector financial institution, who didn’t want to be named.
“In such crisis times, customer service is the key. Merger can wait for a quarter, at least,” the manager added.
In August 2019, Finance Minister Nirmala Sitharaman introduced the merger of 10 public sector banks into 4. Oriental Financial institution of India and United Financial institution of India will likely be merged with Punjab Nationwide Financial institution; Andhra Financial institution and Company Financial institution will likely be merged with Union Financial institution of India; Allahabad Financial institution will likely be merged with Indian Financial institution; and Syndicate Financial institution will likely be merged with Canara Financial institution.
In accordance with the plan, solely the steadiness sheets of those banks will likely be merged on April 1. All of the branches of the transferor banks will turn out to be branches of the transferee financial institution. The precise integration of programs and processes of those banks will take time (as much as a yr). For instance, if a buyer of Andhra Financial institution goes to a department which belonged to Company Financial institution earlier than the merger (and a department of Union Financial institution submit merger), then the entry would nonetheless be made in Andhra Financial institution’s system. All of the branches of Union Financial institution must keep three separate software program programs within the branches. The identical is the case with all different merger-bound banks.
Additionally, the branding of the branches must change. The branches of the transferor banks must don the model of the transferee financial institution. “With limited staff that are operating now and also the lockdown that is in place, it is going to be logistical nightmare to change the branding,” stated a banker with a public sector financial institution.
Some bankers stated the problem of suspending the merger was mentioned amongst them informally, however no formal requests have been made to the Finance Ministry.
There are additionally performance-related issues of the merged entity since financial exercise has virtually come to a halt because of the disaster, which can inevitably have a bearing on the financial institution’s efficiency.
A bit of bankers can be of the view that it’s too late to postpone the merger at this level of time since solely lower than per week is left for the method.
“It will be business as usual after the merger as there is no impact on the customer since only the balance sheets are merged,” stated the chief government of one other merger-bound public sector financial institution.