Here is the digest of important newspaper articles and quiz!
SBI merger with associate banks
State Bank of India has begun the process of merger with its five associate banks. The merger is expected to be completed by the end of the current financial year 2016-17. The five associate banks are State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala and State Bank of Travancore.
The merger will make it a bigger bank. It will bring in a lot of efficiencies. Now there are a lot of overlaps. These can be taken out.
What is the concept of bank consolidation? – The idea of bank consolidation was discussed at length during the â€˜Gyan Sangamâ€™ bankersâ€™ retreat. Consolidation among public sector banks has been under discussion for about a decade now.
Six to ten public sector banks will act as anchor bank to pilot the consolidation process among the state-owned banks.
What would be the benefit of the merger? – A merger would create a banking behemoth with a balance sheet size of Rs.37 trillion. That would be more than five times balance sheet size of Indiaâ€™s second largest lender, ICICI Bank Ltd.
Several state-owned lenders are much too small to be viable in any significant way, and some experts believe that larger banks can serve the banking needs of the countryâ€™s retail and commercial borrowers better.
There are a lot of synergies between the banks. Currently there is a lot of duplication. For instance, each bank runs its own individual treasury. Once you start rationalizing all this, the bank will get a lot of cost benefits.
What are the drawbacks of the move? – The merger of small banks with bigger ones will create quality issue for PSBs. It’s a fight for survival for PSBs as the digital banking initiatives rolled out by private banks and fintech companies are giving a tough fight to government banks.
While the SBI do get the banks cheap as valuations are down , but in terms of balance sheet, the SBI already has a size where the difference between the SBI and the second player is as high as Rs 12 to Rs 13 lakh crore. But a merger Â of associate banks brings all sorts of challenges in terms of people, Â technology, product and branch integration, which takes many years.
The issue on Non Performing Assets is another problem. With the SBI relatively better off than its peers, would be forced to take over the NPAs of other banks.
Source: TheHindu, LiveMint
Sykes-Picot: A treaty with a lasting impact
About a hundred years ago Britain and France signed a secret agreement carving out â€œspheres of influenceâ€ that ultimately created the modern Western Asia or Middle East.
The Sykesâ€“Picot Agreement officially known as the Asia Minor Agreement, was a secret agreement between the United Kingdom of Great Britain and Ireland and the French Third Republic, with the assent of the Russian Empire. The agreement defined their proposed spheres of influence and control in Southwestern Asia. The agreement was based on the premise that the Triple Entente succeed in defeating the Ottoman Empire during World War I.
Britain was allocated control of areas roughly comprising the coastal strip between the Mediterranean Sea and River Jordan, Jordan, southern Iraq, and a small area including the ports of Haifa and Acre, to allow access to the Mediterranean. France was allocated control of southeastern Turkey, northern Iraq, Syria and Lebanon. Russia was to get Istanbul, the Turkish Straits and Armenia.The controlling powers were left free to decide on state boundaries within these areas.
An Arab state or confederation was to be created in the remaining territory, the Arabian desert, under the protection of Britain and France.
What was the impact of the agreement? – The agreement led to creation of artificial states in West Asia. The most prominent ones being Iraq and Syria – and Jordan being another one.
At almost the exact same time, the British foreign minister, John Balfour, came up with the Balfour Declaration to encourage Jewish immigration into Palestine. This can be seen as the beginning of demographic changes that led to the formation of Israel.
Looking at Iraq and Syria today, the artificial borders that were created have now completely disintegrated. Syria itself is divided among multiple groups. Iraqâ€™s government has no control over at least a fourth of its territory. Iraqi Kurdistan, an autonomous region, has demanded freedom from Baghdad. The Syrian Kurdistan region is being run by the Kurds themselves for the first time in several decades.
The map prepared by diplomats Mark Sykes and FranÃ§ois Georges-Picot ignored local identities, leaving several ethnic and social contradictions unaddressed. Even when actual boundaries were identified after the First World War, the focus was on colonial and regional interests, not on the political preferences of the people.
The modern map of the region may not bear any great resemblance to the original lines drawn by Sykes and Picot. What matters more now than the actual Sykes-Picot map is the legacy of the agreement: foreign interventions.
Equally problematic has been the failure of West Asiaâ€™s leaders to live up to the challenges of their respective states. Over the years, they resisted reform and ran largely oppressive systems rooted in social conservatism and patronage. They showed no interest in tackling the problems the Sykes-Picot pact failed to address, such as the Kurdish question. Their authoritarianism simply sharpened the social contradictions in their states, while intra-regional rivalries made peace elusive.
Gender pay gap in India
Monster Salary Index by online career and recruitment solutions provider Monster India showed disparity in salary between men and women. The Gender gap in India stands as high as 27 per cent, where men earned a median gross hourly salary of Rs. 288.68, while women earned Rs, 207.85 per hour.
According to the report, some of the reasons behind gender pay gap could be the preference for male employees over female employees, preference for promotion of male employees to supervisory positions and career breaks of women due to parenthood duties and other socio-cultural factors. Worldwide, lack of pay parity has taken centre stage, with strong views being shared by sportspersons, political and business leaders alike. Men often get higher salary offers than women vying for the same title in the same organisation.
How can Gender Pay gap be addressed? – One of the most important strategies for ensuring that girls and boys will have equal income-earning opportunities as adults is to give them equal access to education. This holds true for both rural and urban India.
Also needed is promotion of careers in science, technology, engineering and mathematics in ways that appeal to women and girls, as well as encouraging girls to take advanced courses in mathematics.
In addition, increasing resources for non-traditional skills training and improving access to vocational training â€“ especially for single mothers â€“ is critical. Also important is providing information to girls and young women still in school about career options, as too many have been discouraged from pursuing higher education and/or job training for occupations not traditionally held by women.
NAAC new ranking system
Educational institutions across the country will be assessed for accreditation on a different ranking system by the National Assessment and Accreditation Council (NAAC).
NAAC is also introducing a new 7 point system. CGPA scores and the rating given to colleges and universities by the NAAC help the higher educational institutions get funding from the UGC.
In the current 4 point system, it was found that two institutions with a CGPA of 3.1 and 3.5 were ranked in the same category. From July 1, 2016 however, the new system, which ranks institutions with CGPA scores ranging between 1.51 and 4.00 in seven scales, will be implemented. For those institutions which have CGPA scores of 1.50 or less, there will be no accreditation by the NAAC.
The new system will also assign a letter grade instead of the earlier descriptions of the institutions performance like Very Good, Good, Satisfactory and Unsatisfactory. In place of these descriptors, a letter grade (A++, A+, A, B++ etc) will be assigned.
What is the NAAC? – The National Assessment and Accreditation Council (NAAC) is an organisation that assesses and accredits institutions of higher education in India. It is an autonomous body funded by University Grants Commission of Government of India headquartered in Bangalore.
NAAC was established in 1994 in response to recommendations of National Policy in Education (1986).
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