Old private sector banks look to consolidate - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Old private sector banks look to consolidate

Feb 21, 2000

According to newspaper reports, three old private sector banks Sangli Bank, Ratnakar Bank, Ganesh Bank of Kurundwad have been asked by the Reserve Bank of India (RBI) to consider merging with United Western Bank. The RBI's decision was motivated by the fact that these banks, although profitable, have a low capital base (but meet the capital adequacy requirements) that makes it very difficult for them to grow in this increasingly competitive environment.

The RBI's decision is a step in the right direction, as it will ensure that the possibility of bank failures is dramatically reduced. With the Indian banking sector undergoing a dramatic change ushered in by the introduction of cutting edge technology, banks with access to little resources will find themselves left out as investors/depositors flock to those offering better services. These banks are profitable and meet the RBI's stipulated capital requirements, but they lack resources, which are needed to step up spending on technology.

A merged entity would have larger resources at its disposal. This could be used to increase spending on technology. Furthermore, with a larger distribution network and more funds to manage, the merged entity would greatly increase its competitive edge (larger reach) apart from benefiting from economies that are generated (larger amount of funds to manage). The latter would also contribute to improving the profitability of the four banks.

Equitymaster requests your view! Post a comment on "Old private sector banks look to consolidate". Click here!

  

More Views on News

PNB Reports an Over Three-Fold Jump in Net Profit as Provisions Fall (Views On News)

Aug 3, 2021

The reduction in provisions for bad loans and asset quality stability may have aided the lender's earnings.

Here's Why IndusInd Bank's Net Profit Doubled in the June Quarter (Views On News)

Jul 28, 2021

All you need to know about the latest quarterly results of IndusInd Bank.

Axis Bank's Stock Falls as Results Disappoint on Asset Quality (Views On News)

Jul 27, 2021

Axis Bank's net profit more than doubles on a spike in other income and lower provisioning.

ICICI Bank's Quarterly Results Sends Stock to 52-Week High (Views On News)

Jul 26, 2021

ICICI Bank expects to maintain margins at the same level in coming quarter.

HDFC Bank Earnings Miss Estimates Due to Sharp Rise in Gross NPAs. Stock Falls 4% (Views On News)

Jul 19, 2021

Covid-19 disrupted HDFC Bank's earnings which showed profit growth at multi-quarter lows.

More Views on News

Most Popular

Sansera Engineering IPO: Key Points to Consider (Views On News)

Sep 8, 2021

This IPO is a pure OFS and the company is looking to raise Rs 12.8 bn at the upper price band of Rs 744.

5 Stocks that Turned Rs 1 Lakh into Rs 1 Crore (Views On News)

Sep 7, 2021

Patience is one of the biggest virtues you need to have if you want to become a crorepati in the stock market.

The Top Stocks to Sell in this Bull Market (Profit Hunter)

Sep 8, 2021

When I saw the list of so-called 'value stocks' published by a leading brokerage, my worst fears came true.

5 Indian Companies that are Leading the AI Race (Views On News)

Sep 9, 2021

During the pandemic, India reported the highest increase in the use of AI at 45% compared to other major economies. AI has potential to add US$90 bn to the Indian economy by 2025.

How to Create a Second Income from Trading (Profit Hunter)

Sep 10, 2021

My trading system that works in all kinds of markets.

More

Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2021
Get our special report Multibagger Stocks Guide (2021 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

S&P BSE BANKEX


Sep 17, 2021 (Close)

S&P BSE BANKEX 5-YR ANALYSIS

COMPARE COMPANY

MARKET STATS