The theory recently mooted by the finance ministry in India, that creating big Banks by merging smaller banks is the solution for the economic crisis in India. Is it so ?
When we analyse deep down, a banker would know that creating big Banks would tend to focus credit inflow into larger conglomerates only and this adversely affecting other sectors of micro ,small & medium scales. A few big Banks, may help only when combined with many small and medium scale banks with their own jurisdictional limits and well defined lending mandates, harnessing and promoting an equally distributed credit availability to all the sector and class of people. Apart from this, the big bank concept also leads to the " too big to fail " theory and the systemic effects which can result in the collapse of the entire economy if a bank of such large scale fails.
It's high time, that our nations financial think tank take a serious view on this and they need to realise, a heavily populated developing country like India needs a mixed economy and public sector enterprises to propel further and to achieve inclusive growth. Otherwise, the wealthier keeps on amassing wealth and the poor will stay always poor.