On March 4, finance minister Arun Jaitley announced his vision to have strong banks rather than “numerically large banks.” With that the buzz for consolidation among public sector banks has gained momentum. The government has announced setting up of a panel to look into the issue. While the panel and the proposed Banks Board Bureau will chalk out the roadmap, insiders said that the number could be reduced from 27 banks to about 6.
Though the exercise could take some time, customers concerns are rising. What will these mergers or public bank consolidation mean for you?
What happens to my deposits?
You deposits will be safe and intact. This is not the first time that banks are merging. In the past, private sector bank Kotak Mahindra Bank (KMB) acquired ING Vysya Bank and a well thought out integrated process was undertaken to ensure that depositors are not impacted.
Will my interest rate on loans go up?
No. Your interest rate on your existing loans will remain the same. When two banks merge, a customer’s loan will be transferred from one bank to the merged lender, and the existing rate will apply for you. However, the merged banks which come together to form one block will have a single and uniform interest rates for the products.
Will there be additional paperwork to be done?
During the process of consolidating public banks, there will minimal impact on customers. Depending on rules proposed during a specific merger, customers might have to go through the KYC process again. The bank passbook and ATM cards will have to be updated but beyond that, it’s a smooth ride for customers.
Proposals for mergers have always irked bank unions and employees. Issues such as mergers of weak banks, chalking out a career path for the chairmen and top management of the merged banks, cultural fitment of lenders will also have to be dealt with, even as the government seemed confident of the merger exercise. But for the customers there are issues to be concerned with, it will be as they say “ business as usual”.