The PSB Mega-Mergers: Integration, Still a Work-in-progress? -Part1
By the turn of this month, it would be one year since the mega merger of 10 public sector banks (PSBs) into four was put into force. After the Union government announced its decision in August 2019, these PSBs were doing the ground work for the actual integration of the six merging banks (MBs) with four anchor banks (ABs). Symbolic of the change, name boards of the MBs were replaced by those of the ABs with effect from 1st April last year. A year before this, two PSBs were merged with the Bank of Baroda. 
How smooth were these merger processes? Did they impact the customers? How did the IT platforms get integrated? How were human resources (HR) practices harmonised? How were the systems and procedures integrated? How were the employees treated? 
Studying the impact of mergers on the claimed economies of scale and consequential higher earnings, efficiency and financial performance is premature at this stage. It is for academicians to undertake such full-fledged study. 
As one who was associated with the industry for over three decades in different roles, I propose to make an assessment of the two merger exercises from purely a practitioner’s point of view.  This analysis is based on the voluminous anecdotal data culled out from the stakeholders through diverse sources—letters from the affected customers to newspapers in the local media, discussions with union functionaries, staff at the ground level, IT professionals and HR practitioners within the banks and messages under circulation in social media. For convenience, I would like to focus on the following five key areas:
1. Systems and procedures
2. Migration to different IT platforms
3. Integration of HR systems and practices
4. Impact on decision making
5. Cultural differences
Let me dwell on each of them with specific examples. 
Systems and Procedures
There were differences in the internal systems and procedures followed by MBs and ABs. For instance, the procedures of processing loan applications—those that come from a huge mass of personal borrowers—appraising them, sanctioning, documentation, and disbursements were different among the MBs and ABs. 
In one MB, all these were centralised in a single office to ensure speedy disposal within a fixed time frame. In contrast, in the AB, the whole process has to pass through different layers spread in a few offices.  
After the integration, the practice of AB is being followed resulting in a new experience of unusual delay affecting the loan aspirants and those who come for renewal or enhancement of existing credit facilities.
In one MB, a customer could get her cheque up to, say, Rs20,000 encashed instantly by approaching the single window operator (SWO), who was empowered to scrutinise the cheque, verify the balance in the account, formally authorise the payment and disburse the cash. 
Or, if she applied for a demand draft (DD), the SWO would process the DD application, debit the amount to the account of, or receive cash from, the applicant, feed the details to the system from his own computer terminal, get the DD printed immediately, sign it and hand it over to the applicant in a matter of a few minutes. 
After the merger, these customers find that there is no system of SWO in the new entity. 
In another MB, for a loan against pledge of gold, the process was simple: the branch manager or his second in command could scrutinise the application, appraise the gold, sanction the permissible amount, execute a single document, which incorporated the promissory note and the letter of pledging the security to the bank along with what in banking parlance is called ‘take delivery letter’ that authorises the bank to take the security with the consent of the applicant. 
Similarly, in the case of a loan against a fixed deposit (FD), the decision would be at a single point; the document would be a single letter of demand promissory note (DPN)-cum-pledge of the FD authorising the bank to appropriate it against the liability in case of default. 
Post-merger, such customers find a more layered processing, sanction, and disbursement and three documents—a DPN, a letter of pledge and a take delivery letter-each attracting separate stamp duty casting an additional burden on the small borrowers. 
In one MB, a depositor could also pledge her FD for an overdraft limit and through cheques or net banking, draw money whenever she needed to. It was in the nature of a running account. The interest would be on the actual debit balance in the overdraft account. 
After the merger, such depositors find that AB does not have the system of overdraft on pledge of FD; if they need temporary funds, they must avail a loan at one shot irrespective of the immediate needs.
In another MB, if there was a wrongful debit of an account, the branch manager had the power to reverse it and re-credit the appropriate amount to the account. In the AB, such corrective actions need prior sanction from higher authorities. Managers have no autonomy to rectify human or system related errors. 
These instances demonstrate how post-merger, instead of adopting simpler, customer-friendly systems prevalent in MBs, ABs have retained their own cumbersome systems.
IT Integration
When the State Bank of India (SBI) took over, during 2017, its five associate banks, the IT alignment was smooth because before the merger the IT platforms were uniform in SBI and its associate banks. In the case of merger of PSBs, the integration posed a series of problems. 
Each of the PSBs had its own customised version of IT software developed in-house or supplied by IT companies. The feedback I have gathered reflects the mess the banks are now in due to inadequate understanding of the differences. 
A higher version of Finacle supplied by Infosys that was being followed by one MB was dumped in favour of the lower version destabilising the system itself after their so-called IT integration. 
The field staff of the MBs had hardly any familiarisation exercise with a different template, nor were there any detailed do-it-yourself kits. They were simply asked to operate a new unfamiliar package.  The messages that went viral from November onwards illustrate this. 
Here are a few samples of the messages circulated in WhatsApp groups:
Pls have proper track of your deposits & keep your receipts & passbooks safe, they gave me a shock when they told that my 4 lakh FD is not reflected in system, it will become very difficult to prove in the absence of proper records or proof to produce.
XXX Mobile (An app of the AB) never opens in first attempt. After several attempts, it opens followed by a message ‘server related issues, try later’. The payees’ list has vanished. It was there yesterday. But vanished today. I had to add payees’ details again and again.
My cheque was returned by the bank stating that the balance in the account was subject to a lien. There was no loan or any liability on my part.
I had effected a remittance through NEFT to a beneficiary in M town. My account was debited but the beneficiary did not get the money in his account. When I approached the manager, he asked me to complain in writing to which there was no response for ten days! Only when I picked up an argument with the manager my account was re-credited with the missing amount.
In several cases, cheques were returned for ‘want of funds’ when the accounts actually had balances to cover the cheque and penalties were debited to the account of the customer. Quarterly interests on fixed deposits (FDs) were not credited on the due dates. This failure affected the payment of loan instalments linked to deposit interests.
There were cases of non-renewal of matured FDs, despite auto-renewal mandate; when personally issues were raised, the banks asked the affected persons to give letters and such letters would not be acted upon promptly.
In transfer of data of customers of MBs to ABs data integrity was affected. Depositors found to their dismay that their relationships with nominees were different from what was originally provided: spouse became ‘other’, son became daughter and vice versa. 
Addresses of the account-holders were not correctly transferred to the database of AB. Standing instructions and periodic interest payment mandates were not carried out. 
This is first part of a two-part series.
(TR Bhat is former president of All India Bank Officers' Confederation (AIBOC) and former officer of Corporation Bank)


Hiren Dedhia
3 years ago
Punjab National Bank's IFSC Code PUNB0074510 is not working while making payment from other bank, message appears Bank details not found for the given IFSC Code. The complaint raised with the MD & CEO of the bank last month but not solved yet.Hope RBI takes note of it.
3 years ago
AB & MB have not merged Employee number or Staff Number. This is for easy recognition . Divide and rule policy is possible through this process. MB Employees can never dream of promotion forever.AB will rule forever.
3 years ago
In several MBs, credit proposals are delayed. Deposited cheques are returned even against adequate balances. Complaints are dealt with lackadaisically. Customer care at negligent level.
Meenal Mamdani
3 years ago
Wow, looks like the bank officials paid no attention to the nitty-gritty of the merger but simply did what the Finance Ministry or Reserve Bank told them.
This level of confusion speaks very poorly of the planning of such a major effort.
I am beginning to have more and more doubts about keeping my money in any Public Sector Bank.
It seems all the PSB employees, from manager on down, have to do is please the babus in whichever govt dept they report to. Customers are irrelevant.
anirban taran
3 years ago
My personal experience with merger of UBI (I bank with UBI) with PNB - :

1) My valid UBI debit card stopped working in November of last year in spite of validity of the card being through December 2020.
2) New Debit card took weeks to activate as the ATM or Internet banking of AB did not recognize my registered phone number to which they send OTP, even though they would send me SMSs on that very same number when I logged into Internet Banking.
3) Any request like ordering new cheque books from Internet banking failed as Internet Banking would pop up an error message that all relevant data is not present. I had to go to branch to order new books and it worked. It seems like Branch Data and Data online is not synced.
4) It has been almost 3 months, and we are yet to get new passbooks. The problem with this mentioned in point 5.
5) Interest payments thru NECS are not credited. Payments are stuck as companies that have sent interest payments say they have not received rejection or failure notice but I am unable to produce copies of account statement (online account statements are missing MICR code which is needed for NECS or new passbooks have not been issued). Branch has no passbooks of ABs to give customers.
6) When updating NEFT/RGTS beneficiaries with other banks, the new IFSC codes are not recognized. We have to contact each financial institution to update their backend with new IFSC code before new updated beneficiaries can be added. REMEMBER, this is not that easy as we have no passbooks with new IFSC code and have to solely depend on account statement from Online banking, that is if one has access to Internet Banking. Good luck for those who have no access to Internet Banking as home branch was not able to provide account statements.
7) Opening/closing of FDs online have stopped which was seamless in erstwhile UBI.
8) My folks who also bank with UBI have had their CRM records stuck in edit mode and home branch people have not been able to resolve the issue for over 2 weeks. They have referred case to IT department and it is pipeline, I guess that is euphemism for they do not know what the status is.
9) It is very disconcerting to see how clueless the home branch people are since the merger. It is very clear that none of them were provided any training in new systems.
10) FDs set to be auto-closed were not closed. When they were manually closed upon request, the interest for period it remained stuck was not credited.
11) SCSS accounts are no longer visible on Internet Banking which was not the case prior to merger.
12) My UBI card was replaced with a contactless Debit card but its contactless feature was turned off, as a matter of fact all of its feature (Ecom, POS) were turned off. Never seen this with other banks. I have not been able to turn on the contactless feature so far in spite of many request to home branch and centralised customer care.

Every day, I find something amiss with the integration. Your article has given me more reasons to dig deeper and find out what else is amiss. I think it is best to close MB accounts and open a new account with AB or move business somewhere else. What a MESS!
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