Bigger is better

Updated: Feb 1 2006, 05:30am hrs
Apropos the news item ‘Ganesh Bank, Federal Bank amalgamation cleared’ ( Jan 25). What cannot be overlooked in the Indian context is that the failure of any bank badly shakes the confidence of the investing fraternity. There have been occasions in the past when banks, under duress, were merged with strong banks.

The Basel-II norms, to be made operational from April 2007, will entail huge capital for banks as a cushion to fall back against the perceived operational risks and also for funding their future expansion programmes. While most Indian banks are still under-prepared and will fall grossly short of new capital requirements once the new norms come into force, banks that will be affected the most are the old generation, region-specific, private banks, due to their depleted fund base. In the absence of a pan-Indian network of branches, specific region business concepts do not always present enou-gh business opportunities to remain profitable.
The management of these banks can, therefore, hardly be blamed for the losses. Mergers are increasingly believed to be the most viable option for banks’ sustenance. Besides shoring their capital base, there are several other accompanying benefits, like enhancing geographical presence, cutting costs and increasing the balance sheet size to meet competition.
Srinivasan Umashankar

Leaders all
According to a recent survey, people are losing their faith in political leaders. However, political leaders can’t mislead the people if the latter are aware of what is right and what is wrong. Corruption isn’t something that can be done away with simply by criticising politicians.
Honesty is still alive in our hearts and we need to realise this. If our citizens know their responsibilities and duties, we don’t need any leader.
Shailesh Kumar