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Letters: Don't rush to conclusions

The five merged entities have cast a heavy blow to the SBI, making it post losses

Business Standard  |  New Delhi 

The editorial, “Mergers do not help” (May 23), projects the current state of the State Bank of India (SBI) after the The five merged entities have cast a heavy blow to the SBI, making it post losses. 

Immediately after a merger, the outcome would be the arithmetical sum of the items in the entities. Except absorption of balance sheet, no strategy could be so far implemented. Adversities of the merged entities cannot disappear with the merger; these get added to the absorbing entity. Hence, there is no surprise in the numbers rolled out by the

The actual journey of a starts after the to derive its synergy. Action needs to be triggered to merge branches, trim controlling offices and weed out surplus staff, if any, or plan their redeployment. Identifying core talent to drive enlarged/restructured lines of business, creating action hubs to tackle non-performing assets and planning to weed out assets carrying higher risk weights to improve capital adequacy ratio can be some of the action in the pipeline. 

Unless the whole process of a is completed, it might be too early to conclude that it offers no solution. Capital infusion can only be viable; it is not capital infusion of We may have to examine mergers and capital infusion to restore the risk appetite of state-owned

Therefore, conclusions cannot be hastened at this stage. More action has to follow mergers for anyone to gauge its impact. At least a medium term of three years is needed to assess the impact of a

K Srinivasa Rao   Noida
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