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3) What do the bank mergers mean for the banking sector? Explain the connection between bank merger and economic growth of the country.(250 words)

Topic:   Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

3) What do the bank mergers mean for the banking sector? Explain the connection between bank merger and economic growth of the country.(250 words)

The hindu

Why this question:

Finance Minister Nirmala Sitharaman recently announced that 10 banks owned by the Government of India will be merged into four larger banks; thus the total number of state owned banks in the country will have come down from 27 (in 2017) to 12. 

Key demand of the question:

One must explain what are bank mergers, their significance and effect on Indian economy.

Directive:

Explain – Clarify the topic by giving a detailed account as to how and why it occurred, or what is the particular context. You must be defining key terms where ever appropriate, and substantiate with relevant associated facts.

Structure of the answer:

Introduction: 

In brief narrate the background of the question.

Body:

Discuss the following aspects in the answer body – 

  • Explain what is a merger and why are so many state owned banks being consolidated.
  • Discuss the various reasons cited by the government for its decision to merge state owned banks.
  • Explain the effect such mergers will have on the economy in detail while presenting pros and cons.

Conclusion:

Conclude with significance of such move to the current conditions of the economy.

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