General Knowledge - Indian Economy - Discussion

Its right that when all the banks will nationalized then every bank would comes under the government, so government will not use his monopoly power for increasing interest rate because its work for human or nations welfare and also there will no access would take place so the deposit will be constant.

Its sure that the monopoly power only used in profit motives by private sectors like as reliance, idea and other trademarks communication companies but if govt will be monopolized then it will work on the basis of human welfare not in profit motive like as RAILWAY there is in fixed fair taken by seeing every stages of person which is living in society which is living in society. So the deposit will be constant not increase and nor decrease.

Suppose If any 3 banks X, Y, Z are nationalized, AND converted into a monopoly bank W then these three banks merged into bank W and new restrictions and laws are made such that no bank can intervene in to this W banks domain or area.

And apparently the laws and policies of individuals banks will be changed and these banks to follows laws of the bank W. But total deposits will be same because only restrictions which defines monopolism will change that is quality of banks will be change but quantity or assets will be same.

Thank you.

The question of increasing or decreasing interest rates arises aftee the merger of banks. If all the banks are nationalized and onverted into a monopoly bank, then the total number of deposits will be eaual to the sum of all the deposits of every individual bank. Hence the total number of deposits will neither increase or decrease i.e. it will remain the same.

Dear asha.

I like to clear your concept, that the monopolized of the bank has doesn't mean that goes in pvt sector, there is a government own responsibility for the public & Public deposits for this they provide Subsidies and all to us, than every thing will be reasonable that time so, neither deposite increase nor decrease.

As the banks ar not involved in the national income the increase and decrase does not effect the deposits of us thats why the deposits will neither increase nor decrease.

Monopoly: Monopoly refers to a market situation where there exists only one sellerwith many buyers.

If the bank is nationalised (monopolised) then d bank will provide a low interest rate on deposits n will charge a high interest rate on loans as there will be no competition. Therefore deposits should decrease. So the answer given on d net is contradicting my concepts.

If all bank will be nationalised then the bank will provide a low interest rate on deposits and will charge a high interest rate on loans because there will be no competitor. So deposits should decrease and the people will not faith on their monopolised policies.

If all banks get converted in nationalized bank then their will be monopoly of govt so govt can decrease interest rate as their will be no competition prevailing in the market and this will lead to low deposit and hence less capital formation.

Monopoly - meanings

1. Exclusive control or possession of something.

2. The exclusive possession or control of the supply or trade in a commodity or service.

3. (economics) a market in which there are many buyers but only one seller.

Now a days many private sector banking providing good services so it becomes necessary to convert into combine so that they can provide good service to people due to faith increase in deposit so that RBI will have to reduce repo rate.