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3:11 pm - Saturday November 23, 5044

Banking Viability

For the last 20 years the world is passing through a prolonged phase of global recession and political upheavel and uncertainties. The industrial production and trade and commerce suffer it worst.

Even the most financially and economically sound nation America also suffered it, when two of its leading banks incurred losses and one of it went under liquidation. India also being a big country also faced and still facing difficult times in its economy.

Presently there are 3 economic zones comprising US and UK, the another is Euro Zone are Russia and in Asia the India and China. During the recession the Rupee of India facing decline its value against US Dollar. The Chinese Yuan suffered so much that China decided to go for devaluation. General public do not understand the intricacies of financial world.

Due to incidental cases of Sahara and Mallya the underrated the banking system that it cannot sustain the stress of non-performing assets. Under such compelling situation the Reserve Bank of India and biggest commercial State Bank of India came forward to alley fears in the mind of public, they informed that increase or accumulation of NPA as is not defaults most part of it is the outcome of fallout of long global recession.

The industrial economy has revived and repayment to banks are also coming in the system. The education loan and default in it is a world-wide phenomenon. The average time of costly higher study around five years but the person do not earn handsomely just after passing out. It take time for him or her to get gainful employment. In educational loan in US 86 billion dollars are entrapped and the US Administration in incurring huge budgetary losses in its education programme.

In India the State Bank of India had merged two of its subsidiary Bank of Indore and Bank of Saurashta earlier and now it going to merge it remaining subsidiary units the State Bank of Bikaner and Jaipur, Patiala, Hyderabad, Mysore and Travancore. It will eliminate heavy expense as its central offices and in SBI will get capital of these banks 5 lakh thousand crores.

These five bank in total doing the business of 9 lakh crores. The balance sheet of the SBI will go up from 28 lakh crores to 35 lakh crores. The SBI is also disinvesting at 5 per cent share holding units in National Stock Exchange to raise one thousand crores. It has 15 per cent share in the NSE and in due course disinvesting the remaining 10 per cent holdings.

The 27 nationalized banks are on the path of recovery. The one of the greatest set back to Indian economies are the vagaries of climate and natural calamities of its agriculture.

Posted in: Editorial

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