What is it about?

The paper analyses the impact of banks consolidation on Indian economy by considering both positive as well as negative aspects of banks mergers. The paper also presents the history of Indian banking and recommending a way forward. Banks merger creates value and there are various positives which can be taken out of consolidation of banks. First, consolidation builds larger banks and makes them capable of facing global competition. Second, it reduces cost of operations of the banks as consolidation leads of multiple banks operating as a single unit.

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Why is it important?

The increasing non-performing assets (NPAs) and to meet the higher funding needs, India witnessed the biggest consolidation in public sector banks. In India the surging NPAs is long witnessed concern and major economic reforms were initiated in Indian banking to curb the issue.

Perspectives

The recent merger has brought in a major policy concern with this consolidation which is availability of loans to smaller businesses.

Dr. Sahil Singh Jasrotia
Jaipuria Institute of Management

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This page is a summary of: Consolidation of Indian PSU banks and the way forward, Journal of Public Affairs, April 2020, Wiley, DOI: 10.1002/pa.2133.
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