After amalgamation of 10 PSBs into 4 PSBs now there is 12 PSBs in India.
Now, assuming, that some Banks out of these 12s got Privatized, I expect the following effects:
- The Biggest impact will be on Social Security Schemes like Pradhan Mantri Jan Dhan Yojna, Suraksha Bima Yojna and so many other yojnas running in current Financial Environment. The Management of newly created Private Banks will be lot lot Profit Oriented and they will restrict them to Profit Making Activities only. Most of these schemes will face a reverse Push. However, MoF (Finance) may force these social security schemes on Banks still, they will limit their involvement for the sake of their Survival.
- Most of the Rural Branches of these Banks will be withdrawn, since most of the Rural Branches contribute a Little or almost Nothing in the Profits, and Management would not like Loss Making Units upon their Heads. Banking will hell lot of Difficult in extreme rural areas.
- Most of the services that the Customer of PSU Banks are enjoying free of cost (somewhat, the customer of Private Banks are enjoying the same too, having due competition from PSU Banks) will be chargeable. Passbooks, ATM Cards, Lost Card Liability, Nomination, Cash Deposit, Enquiries and many small services has to be paid for.
- Currently the PSU Banks having around 8 Lac Personnels. These include the both extreme ends, Both Old and Young, Experienced and Novice, Capable and useless, Worthy and unworthy. The people are employed and they earn salaries. after Privatisation, FIRING is the first thing going to happen. Unworthy and useless employees will have to be thrown out to reduce cost and increase productivity and that will be done with no hesitation.
- Lending to Corporate will become friendly. in PSU Environment, banks run under Govt. Pressure and have to act as Govt. says. Though, it will become friendly, it will be far more secure and vigilant and NPAs may be expected to come down (Unless some serious fraudster grabs the top position and that is not very much unexpected)
- Merger/Acquisition will be an everyday heard story. Small banks will find it really difficult to survive amongst Big Corporate Giants and the Competition will lead to the Survival of the Fittest. The Country will be left with less than 15 Large Private Banks (Possibly)
- The technology in Banking Industry industry is under Drastic Development and this is also a proven fact that due to Governance Reasons, PSU banks are not putting enough fuel in Research and Development. After Privatisation, lot of New Technologies may be expected in Banking.
- Some People have the trust in GOVT BANK BRAND-though this is an old story and the youth like Private Banks on higher side. these newly Privatised Banks will slowly improve their Customer Service Part, though Privatisation will cause little Panic in Senior Citizens and Traditionally thinking people, the over all trust in Banking Industry will grow.
- Given that all the shares of PSU Banks held in the name of President of India are sold, the Banking Index in BSE is also expected to fall badly. You may think the Nation will make a lot of money by selling PSU Bank’s Share but reality is that due to Availability in High Volumes, there will be few buyers for that much of Stock and the Share Price of the Banks will fall bad. The Govt. will not make much of money out of this.