3/11/2021 Courses

Enrolno : 20BSP2626

Name : Ms. TANUSHREE PAUL

Proposed : The effect of banking consolidation on the activities of insurance industry.

Description : The largest ever consolidation in the public sector banking space in India has taken place on
April 1, 2020, when six Public Sector Banks were merged into four large banks in a bid to
make them globally competitive. Following the consolidation, there are now seven large
public sector banks (PSBs), and five smaller ones. There were as many as 27 PSBs in 2017.
The total number of public sector banks in the country have come down from 18 to 12 from
April 1, 2020. As per the mega consolidation plan, Oriental Bank of Commerce and United
Bank of India have merged into Punjab National Bank (PNB); Syndicate Bank into Canara
Bank; Andhra Bank and Corporation Bank into Union Bank of India; and Allahabad Bank into
Indian Bank. To understand the effect of bank consolidation on the activities of insurance
industry we first need to understand how the insurance industry works: The insurance
industry of India has 57 insurance companies 24 are in the life insurance business, while 33
are non-life insurers. The insurance business is driven by the variety of products it has to
offer. Insurance companies have learnt that in order to unlock the potential of Indian Market,
they need to consistently innovate new products and distribution channels. It has a huge
network of corporate agencies and brokers which have been the key to its market leadership
for so long. But as the market grew, a growing demand for customer services from the
massive Indian middle class has appeared. The introduction of a variety of products such as
unit-linked (ULIPs), universal life (known as VIP), critical illness, and health products was key
to the private growth during the early stage. The future looks promising for the life insurance
industry with several changes in regulatory framework which will lead to further change in the
way the industry conducts its business and engages with its customers. And also, the
Hon’ble Finance Minister announced an increase in the foreign investment limit for insurance
companies from 49% to 74% in her budget speech on 1 February 2020. This is a much-
awaited development that will help the Indian insurance sector achieve tremendous growth
through vast pools of capital. It is likely to accelerate growth and spur competition in the
sector raising hopes of a flux of foreign capital into private Indian insurers, so it will be a
matter of analysis how effectively consolidated banks will handle the level of competition that
FDI is likely to create. The project is aimed at studying the possible effects of bank
consolidation on insurance industry. This includes the detailed study of the workings of
insurance companies and after effects of bank consolidation on its activities.

Objective : The objective of the study include the following: * To enumerate the expected role of bank
consolidation on insurance industry. * To examine the purpose of banking consolidation. * To
know about the consolidation exercise and its effect on the operation of insurance industry. *
To understand the positive or negative impact of bank consolidation on insurance industry. *
To study how effectively bank consolidation will handle the increase level of competition that
is likely to occur due to increase in FDI in insurance sector. * To evaluate how bank
consolidation can effect the growth of insurance business in India

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Methodology : I will be comparing the pre and post performance of the insurance entity of banks after the
consolidation has been adopted by using following financial parameters such as Gross Profit
margin, Net Profit margin, Return on Capital Employed, Return on Equity and Debt Equity
Ratio. I will be taking one case of consolidation as Sample i.e., merger of the Oriental Bank
of Commerce, along with United Bank, with Punjab National Bank. The pre merger (three
years prior ) and post merger (after three years) of the financial ratios will be compared.

Schedule : Training- 16 February,2021 - 26 February,2021 , submission of SIP proposal- 10 march,2021

, OJT- 27 February,2021- 14 march,2021 , preparation for interim report- 10 april,2021 ,
Team handling- 20march,2021- end of SIP, submission of final report- 1 june,2021- 5
june,2021.

Limitations : * since there are no readymade documentation available on the insurance company I will be
taking into consideration for this project, I have to browse though the web to get the
necessary data, but again the confidential data related to the company for studying the after
effect of consolidation of banks ,which is also necessary for the project is not available. * the
organizations are not prepared to share the information and their data. * since the time is
stipulated for SIP, the study is confined only to one case of consolidation.

Faculty Guide : Umesh Kalra

Company Guide : Ashwani Singh

Provided On : 11/03/2021 00:08:00

Last Modified : 11/03/2021 00:08:00

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