MONEY AND BANKING (Part – I)

SBI is now India's largest bank. It is a financial services firm that is a public sector bank with a global nature. SBI, based in Mumbai, is the world's 43rd largest bank. The bank is descended from the Bank of Calcutta, created in 1806, making it the Indian Subcontinent's oldest commercial bank. In total, the bank was founded through the acquisitions and mergers of roughly twenty institutions over a while. State Bank of India, a State under Article 12, is governed by the government and Parliament of India and the local and other authorities mentioned in Article 12 of the Indian Constitution.
The State Bank acts as an agent for the Reserve Bank and fulfils the following tasks:

• It serves as the government's bank, collecting money and making payments on the government's behalf, as well as managing public debt.
• It serves as a bank for bankers. It accepts deposits from commercial banks and lends them. It also serves as a clearinghouse for commercial banks, rediscounting their bills of exchange and providing remittance services.
• It accepts the general public's payments and deposits.
• It offers loan facilities against qualified securities, including bills of exchange, goods, promissory notes, real estate or title papers, fully paid corporate shares, debentures, and so on.
• Corporate securities, government securities, treasury bills, and railroad securities are among the investments it makes with its surplus cash.

The full form of ICICI is Industrial Credit and Investment Corporation of India. It was
ICICI Bank's parent organisation which had been incorporated in 2002 with ICICI Bank. ICICI was renamed as ICICI bank just after integration, so it is now branded as ICICI Bank. It has its headquarters in Mumbai, Maharashtra, India and operates in 17 nations across the globe. In 2014, it was India's second-largest investment bank and third-biggest market capitalization bank.

• The Merger of Public Sector Banks (PSBs) in India, also known as the Consolidation of Public Sector Banks in India, refers to the process of combining smaller and weaker banks with larger and stronger ones to create more robust, efficient, and competitive banking entities.
• It aims to consolidate the banking sector so as to enhance the overall stability and performance of the banking system, ensuring it can effectively support the country's economic growth and development.
  Risks and Challenges of Bank Mergers
• Systemic Risk: The 2008 crisis highlighted that presence of large financial institutions pose systemic risk to the economy and such institutions are "too big to fail".
  o Further, in event of any such crisis in future, the onus would lie on the                   government to bail out the institutions, thus posing a moral hazard.
• Human Resource Integration: Many employees would fear job loss and disparities in the form of regional allegiances, benefits, reduced promotional avenues, new culture, etc.
• Affect Financial Inclusion: Merger of Public Sector Banks (PSBs) may lead to the shutting down of overlapping branches of the entities being merged.
  Technological Challenges:
  Various banks are currently operating on different technology platforms.
• Adverse Impact on Big Banks: Forced mergers of the weaker Banks with stronger banks would adversely affect the operations of the strong banks.
• Customer Retention: SBI's recent merger with its associate banks saw customers of associate banks opting to move their business to rival lenders.
• Low Positive Correlation between Size and Efficiency: The merger of Public Sector Banks (PSBs) is
  undertaken on the assumption that a large-sized bank would be more efficient than a small-sized bank.
  o In the case of India, some of the small-sized banks are considered to be                   much more efficient than the large-sized Public Sector Banks.

• The Merger of Public Sector Banks (PSBs) in India, also known as the Consolidation of Public Sector Banks in India, refers to the process of combining smaller and weaker banks with larger and stronger ones to create more robust, efficient, and competitive banking entities.
• It aims to consolidate the banking sector so as to enhance the overall stability and performance of the banking system, ensuring it can effectively support the country's economic growth and development.
  Risks and Challenges of Bank Mergers
• Systemic Risk: The 2008 crisis highlighted that presence of large financial institutions pose systemic risk to the economy and such institutions are "too big to fail".
  o Further, in event of any such crisis in future, the onus would lie on the                   government to bail out the institutions, thus posing a moral hazard.
• Human Resource Integration: Many employees would fear job loss and disparities in the form of regional allegiances, benefits, reduced promotional avenues, new culture, etc.
• Affect Financial Inclusion: Merger of Public Sector Banks (PSBs) may lead to the shutting down of overlapping branches of the entities being merged.
  Technological Challenges:
  Various banks are currently operating on different technology platforms.
• Adverse Impact on Big Banks: Forced mergers of the weaker Banks with stronger banks would adversely affect the operations of the strong banks.
• Customer Retention: SBI's recent merger with its associate banks saw customers of associate banks opting to move their business to rival lenders.
• Low Positive Correlation between Size and Efficiency: The merger of Public Sector Banks (PSBs) is
  undertaken on the assumption that a large-sized bank would be more efficient than a small-sized bank.
  o In the case of India, some of the small-sized banks are considered to be                   much more efficient than the large-sized Public Sector Banks.

• The Merger of Public Sector Banks (PSBs) in India, also known as the Consolidation of Public Sector Banks in India, refers to the process of combining smaller and weaker banks with larger and stronger ones to create more robust, efficient, and competitive banking entities.
• It aims to consolidate the banking sector so as to enhance the overall stability and performance of the banking system, ensuring it can effectively support the country's economic growth and development.
  Risks and Challenges of Bank Mergers
• Systemic Risk: The 2008 crisis highlighted that presence of large financial institutions pose systemic risk to the economy and such institutions are "too big to fail".
  o Further, in event of any such crisis in future, the onus would lie on the                   government to bail out the institutions, thus posing a moral hazard.
• Human Resource Integration: Many employees would fear job loss and disparities in the form of regional allegiances, benefits, reduced promotional avenues, new culture, etc.
• Affect Financial Inclusion: Merger of Public Sector Banks (PSBs) may lead to the shutting down of overlapping branches of the entities being merged.
  Technological Challenges:
  Various banks are currently operating on different technology platforms.
• Adverse Impact on Big Banks: Forced mergers of the weaker Banks with stronger banks would adversely affect the operations of the strong banks.
• Customer Retention: SBI's recent merger with its associate banks saw customers of associate banks opting to move their business to rival lenders.
• Low Positive Correlation between Size and Efficiency: The merger of Public Sector Banks (PSBs) is
  undertaken on the assumption that a large-sized bank would be more efficient than a small-sized bank.
  o In the case of India, some of the small-sized banks are considered to be                   much more efficient than the large-sized Public Sector Banks.

All of the given institutions are involved in medium and long-term industrial financing.