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| Money, it's not so funny |
| 11.08.07 (4:51 am) [edit] |
|
Remember those days when grandma saved every penny in a piggy bank? Perhaps it's time to revisit that era, as it's becoming pretty much difficult to bank on err..., banks.What with trusted banks going bust, mergers, acquisitions and what have you, customers are finding it difficult to find that proverbial safe place to invest their money and watch it grow. The recent line-up of bank mergers may have spelled good news for a few holding accounts in smaller banks, but that's definitely not the case for everyone. If the most recent case was that of the Orient Bank of Commerce taking over the Global Trust Bank, there are more mergers in the pipeline. IDBI may soon be merged with IDBI bank,while HSBC has a stake in UTI. D-day fears A merger needn't always spell doom, but often, it does. An acquisition of a smaller bank by a bigger bank usually comes with a corresponding cut in interest rates on deposits. "Every time there is a takeover, the people who are the most affected are those who have taken loans.Usually, the interest rates on loans go up whenever a smaller bank is taken over by a bigger bank," says Rajesh Udupa, VP,V Seenaiah. Old's gold Swetha M, who is an account holder in IDBI, is concerned that customer services will undergo a sea change if there is a takeover. "When you have an account in a bank for a few years, you tend to develop a bond with the banker, you are attuned to their way of working," she explains. "But if a bank changes, then there is so much inconvenience - you have to become familiar not only with new policies but also people." Share the ware It's not just regular account holders in private banks but even shareholders who have their own share of blues. "When there is a takeover, the shares become volatile and we have to wait and watch as to what price the shares will stabilise at," says Ravi Kumar, a broker. "Look at the way the share prices of GTB fluctuated when the problems began," he adds. Sunny side up Mergers and acquisitions have a bright side too. When a multinational takes over an Indian bank, usually the public can rest reassured that the money will be in safe hands. "It works two ways," explains a vice-president of UTI,who did not want to be named. "Those who believe in conservative banking are not very comfortable with local banks combining with a MNC, but there are others who look at the positive side - if there is MNC backing, it means the local bank will never go bust." |
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