Mergers will not succeed in India: CVR Rajendran

Mergers among public-sector banks will not be successful, said CVR Rajendran, MD & CEO, Catholic Syrian Bank. There has been no successful merger so far, he said, and added that the government lacks the experience to understand this.

There is room for many more banks in India, given the population and needs, said Rajendran, and contrasted the situation with that of the US where the number of banks had come down from 8,000 to 5,000 after mergers. He was speaking at the AIBEA’s National Banking Conclave in Mumbai.

Addressing the conclave on the theme of social banking and commercial banking, he said that the two can co-exist and need not be in conflict. He said banks had to do both and pointed out that if banks choose to ignore commercial banking, they would find that the social sector would not actually be able to absorb everything. So they had to be in all sectors, be it agriculture, MFI, consumer lending and corporate lending.

He advised bank employees in the public sector to be aware of the changes in the market place, and highlighted the need to be competitive.

He pointed out public-sector banks still sanction a loan while private banks sell a loan. There is a difference in attitude even in the terminology. Private banks and NBFCs score on the speed of turnaround, he pointed out. He said that public-sector banks would have to give greater importance to the quality of the balance sheet rather than the size of their book.

Praising the work of labour unions, Rajendran said that that they had an important role in preventing wrongdoings and highlighting negative tendencies and trends.

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