Merger of Bank Will it affect the Vacancies? | Moody’s Report: Rating agency Moody’s said on a statement that the consolidation of 10 public sector banks into 4 will be credit positive due to increased operational scale and capital, and improved corporate governance in the long run. The Consolidated banks will have a larger operating scale that will result in competitiveness in corporate banking and retail lending, where their market share is low.
Merger of Bank Will it affect the Vacancies? | Moody’s Report
Asset quality and profitability will remain broadly unchanged after consolidation. PSU banks already score poorly on these two factors, and there is no reason to assume that the merged entities will make significant improvements in these metrics.
Moody’s report on HR Challenges:
Moody’s told that flexibility in PSBs’ human resources practices, compared with private sector peers, and remained limited.
There is little latitude to provide incentives, which tends to stifle work performance. But this is compounded by the rigidity of recruitment, compensation and career progression, which makes it very difficult to set goals for employees.
No job loss to the existing employees- FM report:
- Sitharaman unveiled a mega plan to merge 10 public sector banks into four as part of plans to create fewer and stronger global-sized lenders as the government looked to boost economic growth from a five-year low.
- Finance minister Nirmala Sitharaman allayed fears of job losses following the proposed merger of public sector banks, saying not even one employee shall be removed following the amalgamation.
- Earlier, responding to the government’s plan, the All India Bank Employees Union has said the amalgamation would lead to closure of banks besides job losses.
- Finance Secretary Rajiv Kumar Said that the government will ensure that no bank employee is hurt by the decisions.
- He also added that no one lost their job when the government helped to facilitate a merger of Dena Bank and Vijaya Bank with Bank of Baroda last year, creating the third-largest bank by loans in the country.
New recruitment:
- Already, over the years, there has been a steady decline in recruitment conducted by the IBPS for its member-banks.
- The number of clerical vacancies has come down progressively to 7,275 last year from 19,243 in 2016, while (the number of) probationary officer posts dropped to 4,336 this year from 16,722 in 2016 per IBPS data.
- Per IBPS (Institute of Banking Personnel Selection) data, these banks have been major recruiters over the years, which will change now.
- But Finance Minister Nirmala Sitharaman assured the unions that the mega merger of 10 public sector banks into four entities will not lead to job losses, it looks likely that the sector will see a tapering of fresh hiring.
Conclusion:
As a majority of applicants for bank jobs in the country are engineering graduates, this is likely to the impact the overall job market scenario.
The Finance Minister says there will no job loss due to the merger. But the real issue for us is the creation of new jobs, which will be hit.
Reduction in fresh recruitment in future will be a natural consequence of any merger as rationalization of branches and staff will have to be worked out to optimize resources.
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