1. Presented by – Pankaj singla

2. Introduction
 A bank is a financial institution and a financial
intermediary that accepts deposits and channels
those deposits into lending activities, either
directly or through capital markets.
 A bank connects customers that have capital
deficits to customers with capital surpluses.

3. Types of banks
 Savings bank
 Commercial banks
 Industrial banks
 Land development banks
 National banks
 Co-operative banks
 Exchange banks
 Consumer banks

4. Facilities by banks
 Utility payments
 Merchant banking
 Factoring services
 Mutual funds
 Gift cheques
 Feasibility reports
 Demat account
 Credit and debit cards
 insurance

5. Adoption of banking technology
 The IT revolution had a great impact in the indian
banking system.
 The use of computers had led to introduction of
online banking in india.
 The Indian banks were finding it difficult to
compete with the international banks in terms of
the customer service without the use of the
information technology and computers.

6. • In 1994, committee on technology issues relating
to payments system, cheque clearing and
securities settlement in the banking industry
(1994)[was set up.
• Total numbers of ATMs installed in India by
various banks as on end March 2005 is 17,642.
• The new private sector banks in India is having
the largest numbers of atm.

7. Consolidation
 Consolidation or amalgamation is the act of
merging many things into one.
 In business, it often refers to the mergers and
acquisitions of many smaller companies into much
larger ones.

9. Functions of Reserve Bank of
India
 Bank of Issue - Under Section 22 of the Reserve
Bank of India Act, the Bank has the sole right to
issue bank notes of all denominations.
 Banker to Government - The second important
function of the Reserve Bank of India is to act as
Government banker, agent and adviser.

10.  Bankers' Bank and Lender of the Last Resort -
The Reserve Bank of India acts as the bankers'
bank. banks have been asked to keep cash
reserves equal to 3 per cent of their aggregate
deposit liabilities.
 Controller of Credit - The Reserve Bank of India
is the controller of credit i.e. it has the power to
influence the volume of credit created by banks in
India.

11.  Custodian of Foreign Reserves - The Reserve
Bank of India has the responsibility to maintain
the official rate of exchange.
 Supervisory functions - In addition to its
traditional central banking functions, the Reserve
bank has certain non-monetary functions of the
nature of supervision of banks and promotion of
sound banking in India.

12. Consolidation: a need for the indian
banking industry
Benefits of Consolidation
1.Growth-The loan to GDP ratio for Indian banks
is about 30 percent which is very low in
comparison to banks in other emerging South East
Asian economies.
Consolidation leads to growth in business
prospects as well as reduces operating costs.
ICICI Bank Limited’s merger with Bank of Madura
is an example where the motive behind
consolidation was growth.

13. 2. Universal banking model and integration of
financial services - Due to the flexibility
provided to banks by RBI in credit delivery, the
DFIs(Developmental Financial Institutions) which
were opened with the aim of improving allocation
efficiency of resources.
Example is idbi’s merger with IDBI bank ltd. In
2004.

14. 3. Synergy benefits - Synergies lead to revenue
enhancement and cost reduction. Consolidation
helps to get a jumpstart by allowing banks to build
on an already established platform.
Oriental Bank of Commerce’s merger with Global
Trust Bank is an example where the motive behind
consolidation was synergy benefits.

15. 4. Strategic benefits - Banks with complimentary
business interests can merge together to
strengthen their market position.
HDFC Bank’s merger with Centurion Bank of Punjab
is an example.
This merger enabled HDFC bank to build a strong
SME (strong and medium enterprises)

16. 5. Ease of market entry - cash rich firms acquire
already established players to enter into new
markets. This provides them an already existing
platform on which they can build upon easily.
Standard Chartered’s merger with ANZ Grindlays is
an example where the motive behind consolidation
was market entry.

17. 6. Regulatory Intervention - RBI in certain cases
forces the merger of ill banks to safeguard the
interests of the depositors and to prevent
financial destabilization.

18. Challenges
 People issues - The mergers of banks pose human
resource management problems. The cross
cultural integration is an important post merger
issue to be handled by the management of the two
banks.
 Technology integration - Integration of
technology platforms poses a stiff challenge as
the merging banks use different working platform
and are at different stages of technology
implementation.