Consolidation in the Banking Industry through Mergers and Acquisitions
Banking scenario since 1991 has been a process of transformation and consolidation. With financial sector reforms implementation, the microenvironment of banking sector has undergone a radical change. Almost all insulations to commercial banking have been peeled off and it has been susceptible to all types of exposures now. There has been paradigm shift in operational, functional, environmental, technological spheres. The reforms emphasised the “commercial character” of the banking system and helped the banks to stand on a firm footing. The first phase of reforms directed mainly towards the operational efficiency has brought concepts like prudential accounting norms, Deregulation of Interest Rates, Credit Delivery, Transparency, Capital Adequacy Norms, Autonomy in Management etc. Banks started cleansing their balance sheets, competition led to improvement in their efficiencies and profit concept being recognised as a test of commercial viability. The transparency made them to realise their own strengths.
In today’s world, banking structures are important and size does matter, however beautiful “small” may be. Consolidation is an inevitable process in the banking sector as banks seek to reap economies of size. Mergers and Acquisitions are considered useful to achieve the requisite size in the short run.
Dr. P. Lakshminarayan is presently Chairperson of Indian Institute of Bankers, Nagpur Centre, Secretary of Indian Institute of Public Administration,
Nagpur and Bankers’ Club, Nagpur and also Vice President of South India Association, Nagpur. Besides the above, he is Associate Member of Indian
Insitute of Bankes, Life Member of South Indian Education Society, Nagpur, Examiner for M.A. Final Exams. of Nagpur University and for JAAIB/CAIIB
Exams. consucted by I.I.B.F.
Dr. Lakshminarayan has worked in Reserve Bank of India for more than 41 years. He worked in almost all the Departments of RBI and retired as Manager
(PP), Nagpur. He is Guest Faculty of Dept. of Business Management, Nagpur University Academic Staff College, Nagpur University, Training Centres of
All Public Sector Banks, Guide of MBA Project of IIM, Ahmedabad, National Academy of Direct Taxes, Nagpur, Regional Telecom Training Centre,
Nagpur.
He has published more than 100 papers in leading journals including IBA Bulletin. He was awarded first prize in National Level Essay Competition on the topic “Disaster Management” from Vice President of India and second price from Reserve Bank of India for the paper on “Relevance of nehruvian
Planning in the present day context”.
“Research reviewing banking crisis across 43 countries indicates that the cumulative loss of GNP could amount to around 15 percent – 20 percent.
May 1991: n. pag. Academic Search Elite. Palni Site Search. Goshen College Good Library. 2 Mar. 2001.
Gandhi, Mohandas Karamchand. Young India, Volume 9. N.p.: Navajivan Publishing House, 1927. Print. Vol. 9 of Young India.
at.” Despite his failure, he is still an Indian man, searching for a proclamation of his
Naoroji, The Grand Little Man of India: Dadabhai Naoroji: speeches & writings, ed A. Moin Zaidi (New Delhi: S. Chand, 1984), pp. 125‐148.
Biren Paul the inhabitant of Ghurni is 48 years old, national award winner has done ultimate and eye catching creations in clay. He is famous for his human figures and mould works. Due to grievance& dissatisfaction in work and the low demand he went to lucknow for job and got a few thousand rupees monthly. But due to the costly livelihood there he came back to Ghurni. The other reason for returning Ghurni was his children and family. He has a shop there in Ghurni but income from this shop is very low.
held several senior management position with one of India’s largest industrial groups. A gold medalist charted accountant and former president Bombay stock exchange (BSE). Key executive of Birla group. The driving force behind the setting up of the Birla Group’s cement and financial services business among others. And in the setting up of the online trading system and the central depository services Ltd India. With over 40 years in the industry.
He has a rich experience over 20 years in distributing Financial Services and consumer durables. He has joined Bajaj from American Express, were he worked in various positions in their personal loans and consumer card business for over 9 years. He deals with the unsecured business and personal loans of Bajaj Finserv Lending.
Ratan Tata was the chairman of Tata group and is an Indian businessman and currently the chairman Emeritus of Tata sons.As he stepped down from being the chairman of the 100 billion worth Tata conglomerate ,the team will sure feel his absence,but even the citizens of India will have a reason to miss his retirement.That was the type of a man,Ratan Tata was, not only looking for ways to upgrade and thrive his business but also on the best interest of his environment and surroundings.An economist once wrote, ‘by standing out against graph so publicly and consistently,Mr.Tata was ahead of his time.’ For instance,an episode in which the Tatas were in a conflict and took tough decisions and had to relocate their plants in Gujarat
The central bank of any country is the main driving force for the implementation and development of the national payment system. The Indian payments systems have undergone a volumetric and qualitative change after globalization. At present the payments in India can be made through paper based instrument ,electronic instrument and other instrument ,with the introduction of card-based payments on POS, ATMS and Kiosks, Electronic Funds Transfers (NEFT and RTGS), Electronic Clearing Service, Mobile and Internet
Shirur, Anand. "Evolution of Money by Anand Shirur." Evolution of Money. 07 Dec. 2013. .
First Challenge the expertise for strategy formulation implementation within a changing business environment. In May 1994, I was selected as a member of Task Force Team that prepare to set up HMC's own finance company. During my six-month assignment, I worked under pressured time constraints. After lots of conflicts with Ministry of Finance and Economy, we got government approval in late 1994. This opportunity provided me with valuable experience in every aspect of business and team experience. Working with the extremely qualified and professional upper management was valuable in shaping my career goals. Especially, during my business trip to Hyundai Motor Finance Company in CA, USA, the international exposure increased my confidence and desire to pursue a career in international business. After the expiration of the Task Force, I was given the option between joining the newly established Finance Company and remaining in HMC. At that time, International Finance Team(IFT) offered to work together with them. I accepted the proposal because I wanted to further expand my international exposure. Second Challenge the enhancement of the global perspective and strategic vision required to successfully compete in a globalized business setting. In January 1995, I was trasferres to IFT and took over two jobs of financing Foreign Direct Investment and Investor Relations. In march 1995, HMC was planning the biggest foreign direct investment in India ever since the failure in canada, and I, together with my two subordinates, was responsible for project. Despite the fact that only three months had passes after taking a new position. I could carry out the complicated processes on the project. partly owning to the past force team experience.
Machiraju, H. R. , 2002. International Financial Markets And India. 1st ed. New Delhi: New Age International.
The study is primarily designed to find out the continuous issue of the banking system in
Never have I ever climbed a mountain peak. As a child, I imagined myself conducting expeditions in deep-frozen pathways, leading amateur explorers to the top of the world, and instructing rookies in surviving harsh blizzards. Even though slightly altered, my childhood dream has been achieved. I led a team of fellow classmates, in my Strategic Management course, to the success summit of a financial competition. Over the course of a semester, I and my teammates were supposed to create and manage a company of the IT industry, in a computer-simulated environment, along with other four rival teams. I dealt with strategy and financial matters of our virtual enterprise, while my colleagues were working on marketing and manufacturing. During the four months of the exercise, I have experienced finance from various aspects: capital budgeting, through selecting favorable investment for upcoming quarters; debt management, by assessing the necessary amount and efficiency of loans; profitability analysis and dividend policy, which had been used to compile the company’s general performance index. Working in a multinational team, which included an American, a Norwegian and a Moldovan, strengthen my negotiations skills, as well as flexibility and cooperation. But above all, this experience intensified my passion for finance. Of course, a pleasant bonus was the fact that, in the end, our company’s financial performance was six times the performance of second-best team.
A variety of groups are concerned in bank profitability for various reasons. The bank shareholders would want to know if the value of their investments is high or low. The investors also use current and past performance to predict future price of the banks’ shares traded on the stock exchanged. The management of the bank as trustee of the shareholders is evaluated and compensated on the basis of how well their decisions and planning have contributed to growth in assets and profits of their banks. Employees of bank also are concerned with profits, since their salaries and promotions are frequently tied to the profitability performance of their banks. Depositors use bank performance and profitability as indicators of security for their deposits in the banks. Finally, business community and general public are concerned about their banks’ performance to the extent that their economic prosperity is linked to the success or failure of their banks.