Friday, December 12, 2014

SBI should keep its eyes and ears open

Efficiency of banks does not go by the size of capital but by the performance and perception of the customer. SBI chairman, Arundhati Bhattacharya at the Delhi Economic Conclave sidelines has been arguing for freedom to decide on mergers and acquisitions be left to the banks themselves. Yes, it is the banks concerned and their boards that should take a responsible call on the issue. Has SBI taken stock of the issues that came up in its acquisition of the two of its Associates and the HR problems it had to handle and perhaps continuing to handle? Does it have a discussion forum where the customers and clients of the merged banks would also have a say? SBIs' ATMs are most times inefficient delivery points. They bask under the glory of their associate bank ATMs. Their attention to the customers has much to comment. Their corporate loans are the big ticket NPAs because of unperceived credit risks and poor due diligence. They are living by legacy.

Smaller banks like Karur Vysya and South Indian Bank have carved out niche in their operating ground while SBI is losing out the market by the day if not by the hour. if the number of accounts are growing it is because of lack of choice in the proximity and not because of its proven excellence. It clocked maximum complaints with the Banking Ombudsman! It is time to keep its eyes and ears open.

History of mergers and acquisitions of banks in India is not so much on economic considerations as on some compulsive agenda. Leave off the reverse mergers of ICICI post liberalization or the others in the private sector, where also it is the weak being acquired by the strong. In regard to public sector banks, it took nearly 20 years for the merger issues of New Bank of India with the Punjab National Bank to be sorted out. Global Trust Bank Ltd merged with the PSB- Oriental Bank of Commerce has left technology scars on the OBC as the later was far behind the former at the time of takeover. Stock values do not jump on account of size alone. Accessing the capital in the market for PSBs will depend on who takes the lead. If the private sector banks like the Kotak that recently took over the ING Vysya, Yes Bank, HDFC Bank take the que first the PSBs could be on the back foot.