Bank Officers’ Association Opposes Bank Mergers

Finance Minister Nirmala Sitharaman on Friday, August 30, announced the amalgamation of 10 public sector banks into four big banks. After the mergers, the total number of public sector banks in the country will come down from 27 in 2017 to 12, she said. According to the minister, these bank mergers, along with the ones that have already been carried out, will lead to the creation of big banks with an enhanced capacity to give credit. She added that these big banks would also be able to compete globally and increase their operational efficiency by reducing their cost of lending.

Bankers from across the country, however, seem to be in disagreement with the claims made by the finance minister. All India Bank Officers’ Confederation (AIBOC), an apex body of the bank officers’ trade union movement in the country, having a membership of around 3.2 lakh officers, expressed its outright opposition to the merger.

AIBOC said in a statement released on Friday, “Such bank merger announcements made by the government undermine the autonomy of the bank boards and make a mockery of the provisions of the Banking Companies Acquisition and Transfer of Undertaking Act, 1970 & 1980. The PSU bank boards have no representatives of either officer or workmen director despite explicit legal provision and direction of Hon’ble Delhi High Court. Such illegal decisions against the interests of the PSU Banks and its officers and employees are not acceptable.”

Also read: Modi Govt Announces Mega Merger of Public Sector Banks

Talking to NewsClick, Soumya Dutta, General Secretary of AIBOC said, “The justification given by the finance minister for the mergers is inaccurate. State Bank of India still continues to face financial stress in the post-merger scenario. The merger of Dena Bank and Vijaya Bank with Bank of Baroda has not yet yielded any significant improvements. These mergers will act as a major impediment to the government’s dream of moving towards a $5 trillion economy, instead of being a catalytic process as claimed by the minister.”

Denouncing the announcement, the Centre of Indian Trade Unions (CITU) said, "The experience of previous cases of merger of banks established the inevitability of such disastrous consequences. After merger of five associate banks with State Bank of India, around 1000 branches had been closed. Merger of Dena Bank and Vijaya Bank with Bank of Baroda is going to shut down around 800 more branches. A substantial section of those closed or going-to-be-closed branches are in the rural areas, where the private banks never tread even by mistake."

The finance minister announced that four new banks will be created by merging 10 PSBs – Canara Bank and Syndicate Bank; Union Bank, Andhra Bank and Corporation Bank; Punjab National Bank, Oriental Bank of Commerce and United Bank of India; Indian Bank and Allahabad Bank. Dutta said that this will only enable them to create larger balance sheets to conceal the non-performing assets (NPAs) and absorb more losses and haircuts. He added, “It is common knowledge that mergers cannot resolve or clean up the balance sheets.”

AIBOC claimed that these mergers are only an attempt of the government to help the corporates. Their statement said, “The ultimate objective of the government is not only to bail out the delinquent corporate, who owe the PSU banks trillions of rupees in bad loans but to eventually sell the PSBs (public sector banks) to these unscrupulous corporate entities and pave the way for non-banking financial companies and fintech companies to make inroads into areas dominated by PSBs.”

Also watch: Bank Mergers Aimed at Helping Big Corporates like Reliance, Says CP Krishnan

The union has said that the mergers will result in closing of branches, while branch expansion is needed to make banking accessible to all. According to them, the merger will also lead to a significant number of employees losing their jobs. They have said that they will build up countrywide resistance against this wholesale merger move, as it is a step towards denationalisation of banks and privatisation of the sector.

Condemning the destructive move, CITU has hailed the proactive move of the United Forum of Bank Unions, an umbrella body of the nine largest bank unions, to launch immediate protest countrywide. The statement said, "They will definitely launch a bigger militant action to resist this destructive game plan of the government. CITU calls upon the working class to also raise their voice of protest with active solidarity with the struggling bank employees."