Adding to Selvam's comments, IBA deputy chairman K Kannan said that the entire logic of mergers is not to add one plus one and arrive at two, the ideal formula would be to to add one plus one to arrive at three. The synergistics must give added momentum to the new entity, otherwise it would not make logic, he said.

Asked if bank mergers would be possible in the face of opposition from labour, he replied that workers will have to adjust to the contingencies of the industry. ``Banks exist to serve customers. If the outside environment is changing fast, the industry has to adapt to change,'' he said.

Besidesrestructuring internally, the conference will focus on systemic problems in the industry. ``Bank officers in the country are scared to take decisions because they are all scared of the vigilance commission pulling them up. There has to be some solution to this,'' Selvam said. The other important issue in the external environment is the question of a legal system to make the recovery of bad loans possible, he added.

IBA is alert to the rapidly changing industrial environment in the country, he said. It has been interacting with different industry organisations and chambers of industry to get a better understanding of problems faced by different sectors in the current slowdown, he added. For example, the software industry has received bank assistance of about Rs 400 crore in 1997-98. The sector needs bank finance of about 10 times this amount and the IBA is studying how finance can be expanded to this sector, he said.

Globally, the banking industry is going through change. In order to keep step with thischange, IBA has appointed Arthur Andersen to suggest restructuring for the apex organisation, Selvam said. Banks in India cannot be caught napping. Interaction with experts on evolving trends at the conference will convey a flavour of change in the global market, he added.

Commenting on the blurring of lines between banks and financial institutions, Selvam said that financial institutions cannot become competitors for banks ``as they will take 30 years to understand the nuances of short-term lending because it is a different game.'' Moreover, FIs, which have been historically funded by the SLR funds raised by the government, do not have the retail network comparable with banks to raise resources and offer working capital needs of relatively small companies, he added.

He said that there is no adversorial relationship between banks and FIs. IBA has invited FIs to become its members, he said. Banks floated by IDBI, UTI and ICICI are IBA members, he said.

The conference has set itself an ambitious agenda.Besides collective soul-searching, the top banking brass of the country representing 73 banks, which includes public sector banks, private banks and foreign banks, will focus on preparing a blueprint for the competitive times ahead.