Merger isn't a good idea

With reference to your article, “Quick fix solution to recover bank debt” (January 3), the alternative suggested by the author has already run its course in economics and banking research. A number of articles have been written in the columns of your paper detailing the cons of waving such a magic wand. A few of them are, merging a weak bank (here, higher Non Performing Assets [NPA]) with a relatively strong bank does not solve the endemic problem of NPAs, it merely sweeps them under the carpet. Another issue arising out of such maneuvering will be the resistance from the states. Some states may not give accent to a bank headquartered in their jurisdiction to be merged with a bank from another state and eventually result in shifting of base. And lastly, merger of any two public entities comes with its own set of problems, take the case of Air India and Indian Airlines. Juxtaposing this with the banking industry, such an exercise will give birth to a bad bank within a bank.

Durgesh Pawar, Greater Noida

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