C ONTENTS S.No. Chapter Name Page No . 1. BANKS MERGER IN INDIA: GOOD OR BAD? 1 - 3 2 . International and Bilateral 4 - 6 3 . National 7 - 10 5 . States 11 - 13 6 . Economy and Banking 14 - 20 7. RBI Updates 21 - 25 8 . Schemes 26 9 . Cabinet Approvals 27 10 . Science a nd Technology 28 - 31 11 . Defence 32 12 . Awards and Honours 33 13 . Sports 34 - 35 14 . Persons In News 36 15 . Obituaries 37 16 . Reports, Indices and Ranking 38 - 40 18 . Summits and Conferences 4 1 22. Committees 41 19 . Appointments 42 21. Books and Authors 43 25 . Days And Themes 44 Multiple Choice Questions (Current Affairs) 45 - 56 Current Affairs May 2020 – Digest 1. B ANKS M ERGER IN I NDIA : GOOD OR BAD ? and Corporation Bank into Union Bank of India; he largest ever merger in the public sector banking T and Allahabad Bank into Indian Bank. space in India ha s taken place on April 1, 2020 when six Punjab National Bank becomes 2nd Largest Bank: Public Sector Banks were merged into four large banks Oriental Bank of Commerce and United Bank in a bid to make them globally competitive. Customers, merger into Punjab National Bank has created a including depositors of the merging banks, will now be bank with ₹17.95 lakh crore business and 11,437 treated as customers of the banks in which they have branches. merged. 4th Largest Bank – Merger of Canara Bank & Following the consolidation, there are now seven Syndicate Bank: The merger of Syndicate Bank large public sector banks (PSBs), and five smaller with Canara Bank has created the fourth largest ones. There were as many as 27 PSBs in 2017. public sector bank with ₹15.20 lakh crore business The total number of public sect or banks in the and a branch network of 10,324. country have come down from 18 to 12 from April 5th Largest Bank: Merger of Andhra Bank and 1, 2020. Corporation Bank with Union Bank of India has The Banks’ merger dated April 1, 2020 has created India's fifth largest public sector bank with resulted in the creation of seven large PSBs with ₹ 14.59 lakh crore business and 9,609 branches. scale and national reach, with each amalgamated 7th Largest Bank: The merger of Allahabad Bank entity having business of over Rs 8 lakh crore and it with Indian Bank has created the seventh largest has helped to c reate banks with scale comparable to public sector bank with ₹8.08 lakh crore business global banks and capable of competing effectively having strong branch networks in the south, north in India and globally. and east of th e country As per the mega consolidation plan, Oriental Bank The exercise assumes significance as it has taken of Commerce and United Bank of India have place at a time when the entire country is under the merged into Punjab National Bank (PNB); grip of COVID - 19 outbreak. It has triggered nation Syndicate Bank into Canara Bank; Andhra Bank wide lockdown to contain the spread of the deadly 1 IACE ( I ndian A cademy of C ompetitive E xams) www.iace.co.in Toll Free: 1800 - 270 - 9975, Ph: 9533200400 Current Affairs May 2020 – Digest virus. Experts are of the opinion that mer ger at this Advantages of Bank Mergers point of time may not be remain a very smooth and • Larger Bank is capable of facing global competition seamless transition. However, heads of the anchor banks have exuded confidence and do not find any • The merger will reduce the cost of banking operation problem as the process has gone as per the plan • Merger will result in better NPA and Risk with certain modification in implementation. management Th e four anchor banks PNB, Canara Ban k, Union • Merger will help in improving the professional Bank and Indian Bank have postponed some part standards of the implementation and processes due to the lockdown for example like loan process which were • Decisions on High Lending requirements can be taken proposed to be followed earlier. promptly In addition, consolidation would a lso provide • For the bank, retaining and enhancing its identity as a impetus to merged entities by increasing their larger bank becomes easier. After the merger, benefits ability to support larger ticket - size lending and have of merger are enormous and the biggest is generation of competitive operations by virtue of greater financial a brand new customer base, empowering of bus iness, capacity. increased hold in the market share, opportunity of Last year, Dena Bank and Vijaya Bank were technology upgrade. Thus as a whole it proves to be merged with Bank of Baroda. Prior to this, the beneficial to the overall Economy government had merged five associate banks of SBI and Bharatiya Mahila Bank with the public sector • Provides better efficiency ratio for business operations bank. These were State Bank of Patiala, State Bank as well as banking operations which is beneficial for the of Bikaner and Jaipur, State Bank of Mysore, State economy Bank of Travancore and State Bank of Hyderab ad • Minimization of overall risk is there due to mergers effective April 2017. and acquisitions which is always good from the Six Banks Untouched: The mega merger has left business point of view untouched six other banks out of which two are national banks and the four have regional focus. • Leads to increase in profitability and helps in raising The untouched banks are Bank of India, Central the standard of living which is absolutely crucial for a Bank of India, Indian Overseas Bank, Uco B ank, growi ng economy like India Bank of Maharashtra and Punjab & Sind Bank • Chances of survival of underperforming banks which will continue as separate entities as before. increases hence customer trust remains intact which is Rs. 55000 Crore Recapitalization Plan With Mega vital for the Economy. The weaker bank gets merged Merger: The Finance Minister of India has also into stronger one and gets the benefit of large scale announced Rs.55,000 Crore recapitalization plan operations for the banks formed after merger. Besides, recapitalization will also be infused to the six other • The objectives of financial inclusion and broadening banks which are not the part of this merger. the geographical reach of banking can be achieved better with the merger of large public sector banks and Fruitful Result of Banks’ Merger leveraging on their expertise. As per studies conducted, most of the mergers done • With the large scale expertise available in every sphere in the past, have proved to be an overall success for of banking operation, t he scale of inefficiency which is the weaker banks although there are no concrete more in case of small banks, will be minimized parameters to verify this observation. Hence going by the track record merger and acquisition in Indian • The merger will help the geographically concentrated banking have been fruitful for the Indian Economy. regionally present banks to expand their coverage 2 IACE ( I ndian A cademy of C ompetitive E xams) www.iace.co.in Toll Free: 1800 - 270 - 9975, Ph: 9533200400 Current Affairs May 2020 – Digest • Larger size of the Bank will help the merged banks to managed with frequent and careful communication it offer more produ cts and services and help in integrated may lead to loss of business which is never good for the growth of the Banking sector Economy. • A larger bank can manage its short and long term • Experts are of the view that Co - existence of the big, liquidity better. There will not be any need for overnight medium and regional banks would be preferable in the borrowings in call money market and from RBI under pr esent scenario. Acco rding to them most acquisitions Liquidity Adjustment Facili ty (LAF) and Marginal in India were borne out of compulsions and over 90 per Standing Facility (MSF) cent of past acquisitions had failed to achieve the • In the global market, the Indian banks will gain greater objectives. recognition and higher rating • Many banks focus on regional banking requirements. • With a larger capital base and higher liquidity, the With the merger the very purpose of establishing the burden on the central government to recapitalize the bank to cater to regional needs is lost. public sector b anks again and again will come down • Large bank size may create more problems also. Large substantially global banks had collapsed during the global financial • Multiple posts of CMD, ED, GM and Zonal Managers crisis while smaller ones had survived the crisis due to will be abolished, resulting in substantial financial their strengths and focus on micro aspects. savings • Wit h the merger, the weaknesses of the small banks • Bank staff will be under single umbrella in regard to are also transferred to the bigger bank. their service conditions and wages inst ead of facing • So far small scale losses and recapitalization could disparities. revive the capital base of small banks. Now if the giant Problems Arising due to Mergers & Acquisitions in shaped bank books huge loss or incurs high NPAs as it Indian Banking ha d been incurring, it will be difficult for the entire banking system to sustain. Most of the problems arising due to mergers and acquisitions are more emotional and social in nature Important But to Remain under Watch than technical or managerial. The major problems • Mergers are important for the consolidation and which arise are: - expansion purposes that is why in today’s scenario • Compliance needed in every decision which might not many private sector banks are genuinely interested in be favorable as thinking perspectives and risk taking mergers and acquisition.