PSU Banks & Their Capital Requirements
Usually one is made to believe that many of the ‘small’ PSU banks are unable to perform for lack of adequate capital for doing so. In my opinion, it is only a partial truth.
It is true that many small PSU Banks have a small amount as capital, than the theoretical need. But let us take an example of “Indian Bank”.
The Capital Employed is about 480 Crores plus, but the Reserves and Surpluses are almost 13,000 Crores, making the shareholder’s Fund to be little less than 13,500 Crores as on 31st Mar 2016. Now, this figure does not look inadequate.
Moreover, instead of having multiple banks, it would be advisable to have limited number of banks, well controlled with proper administration (as found in the Private Sector Banks). For this, following steps could be considered, if found appropriate with or without alterations :
Each small PSU bank has some or the other prime area for it’s operations which give better results than it’s operations in the other parts of the country. The country could be divided in five zones for this purpose, North, South, East, West and Central, and those small banks in each zone, who have a strong hold in that zone could be considered for a merger.
Care could be taken that the five banks so formed are having similar shareholder funds and there is no large disparity in this amounts for these five banks so formed. They could be suitably named like Indian Western Bank, Indian Central Bank, and so on.
With such mergers, the problem of the need for additional capital may get disappeared and tax payers money could be saved for a better use elsewhere, than putting it in these banks.
And for better administration, one needs to consider two important needs for any business. Ability of a person to do the job, than one’s work experience in years (seniority) and the Exit Policy for those, who have become dead woods for the organization. more
It is true that many small PSU Banks have a small amount as capital, than the theoretical need. But let us take an example of “Indian Bank”.
The Capital Employed is about 480 Crores plus, but the Reserves and Surpluses are almost 13,000 Crores, making the shareholder’s Fund to be little less than 13,500 Crores as on 31st Mar 2016. Now, this figure does not look inadequate.
Moreover, instead of having multiple banks, it would be advisable to have limited number of banks, well controlled with proper administration (as found in the Private Sector Banks). For this, following steps could be considered, if found appropriate with or without alterations :
Each small PSU bank has some or the other prime area for it’s operations which give better results than it’s operations in the other parts of the country. The country could be divided in five zones for this purpose, North, South, East, West and Central, and those small banks in each zone, who have a strong hold in that zone could be considered for a merger.
Care could be taken that the five banks so formed are having similar shareholder funds and there is no large disparity in this amounts for these five banks so formed. They could be suitably named like Indian Western Bank, Indian Central Bank, and so on.
With such mergers, the problem of the need for additional capital may get disappeared and tax payers money could be saved for a better use elsewhere, than putting it in these banks.
And for better administration, one needs to consider two important needs for any business. Ability of a person to do the job, than one’s work experience in years (seniority) and the Exit Policy for those, who have become dead woods for the organization. more
Viewed by 475
View all 15 comments Below 15 comments
I am situated in Doddamasandra , Vidyaranyapura, Bangalore (N). Iam interested in opening montessory . can any one guide me in these regards and alos want to know does bank provide loan to start this business. more
Sep 11
There is NO SMALL PSU Bank in India. If you observe the Balance Sheet of any of the PSU Bank so to ascertain. Furthermore all / majority of the Govt. funds are routed through these Banks, this means that these banks can utilize the huge funds even for short period, without any cost but the benefits in it's totality. The Million dolor question is that the bad debts /loans given lavishly withoout ascertaining any credentials as well as without any accountability and Responsibility. There is Nothing to hide that Crorers of Rupees were given which was and is resulted as bad debt, well knowing the fact that without the knowledge and active participation / support of the High profile Bankers it will not be possible. A simple example is of Vihay Mallya- who simply vanish with Rs 9500/+ crors of rupees - of Bank consortium including State bank of India. If anyone goes furthermore to know that the Bank officials / relatives either got free Kingfisher trips &/or buttered their hands, and NOW there is Hue & cry against Vijay Mullya - BUT not a single cry of these culprits. Common-man's Home loan of few thousand to few lacs of rupees require 300 to 400% securities and securities, BUT for 3,00,000/- lacs Crorers rupees Bad debt / loans does not require any security and securities?????? OVER AND above nobody is accountable and responsible for this but the society as the Govt. had infused several lacs of crorers of Rupees to these Banks. THIS IS OUR SOCIAL SYSTEM AND OUR TAX DEPT'S. more
Aug 13
Thanks Sir! On Wed, Aug 10, 2016 at 11:25 PM, Ashok Kumar Mohapatra < support@localcirclesmail.com> wrote: > more
Aug 11
I saw interview on ET NOW around 6PM with Mr Raghuram Rajan- just before quitting in a few days. His statement were clear. He felt taht industry was unhappy with his targeting NPAs. He also mentioned about Mr.Swammy's attacks. Inflation target of 4%+/- 2% is too liberal. It should be 2% + 2% or less. Less than 6% is impossible, unimaginative future Governor or FM. PM Modi seems to have said that the next Governor must be more aware of Indian operations (does it mean back to days of closing eyes on NPA and let the loot continue???).Mr Mallya will merrily come back and Banks will close their eyes. Nothing will happen to black money holders- it will be back to old style. interest rates will go up- Senior Citizens can feel happy (but inflation too will creep up to 7 to 8%. Rs /$ will touch 75 in say 6 months. Exporters and software companies will be happy. Imports will go up. Make in India will get tossed out. more
Aug 10
Internet Banking may be made compulsory with large ATMs facility by the Nationalised Banks especially in urban areas leaving small account holders who are illiterate and working in unorganised sectors like Plumber, Mesons, Electricians and carpenters etc to ensure less burden of manpower in the branches. more
Aug 10
