Why Kerala is not giving a green signal to SBT-SBI merger3 min read . Updated: 06 Sep 2016, 04:55 PM IST
There is mounting opposition to the proposed merger of the State Bank of Travancore and State Bank of India in Kerala
Bengaluru: In Kerala’s deeply divided politics, it represented an unusual sight.
V.S. Achuthanandan, Kerala’s most senior communist leader, and V.M. Sudheeran, president of the state unit of rival Congress party, shared a podium on Tuesday in a show of mounting opposition to the proposed merger of the State Bank of Travancore (SBT) and State Bank of India (SBI).
The “people’s rally" in Thiruvananthapuram was one of many such agitations that have been held in the last few months since the two banks moved toward a merger.
The proposed merger of SBI and its subsidiaries, approved by the SBI board last month, is supposed to create a banking behemoth which will make it into one of the top 50 banks of the world, Mint reported on 19 August. However, the merger is subject to approvals from the Reserve Bank of India (RBI) and the government of India.
The plan has not gone down well in Kerala.
The state’s legislative assembly passed a resolution against the merger in July, asking the Centre and Reserve Bank of India to take back the decision. Legislators cutting across political parties voted for it, except for the lone Bharatiya Janata Party legislator in the House.
Last month, chief minister Pinarayi Vijayan wrote to Prime Minister Narendra Modi against the merger and criticised the central government’s transfer of a senior official of SBT for allegedly opposing the merger.
Last week, the matter also took a legal turn. The Kerala high court issued notices to the Union finance ministry, the RBI, SBI, SBT and the state government on a petition filed against the move by a “Save-SBT Forum". The forum represents central trade unions, politicians from both ruling and opposition parties and well-known individuals such as the filmmaker Adoor Gopalakrishnan.
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At Tuesday’s public rally, also organised by the forum, leaders said they will hold sit-ins and hunger strikes, while continuing a parallel fight in the courts.
“We have decided to stage a hunger strike at all district centers of SBT on 12 September, and have decided to intensify agitation with relay hunger strike in September last week in Delhi, a Raj Bhavan march in October and a Parliament Maha Dharna in November," said K.S. Krishna, general secretary of SBTEU (SBT Employees Union) and convenor of the Save-SBT forum.
The agitation by the employees union is seemingly in response to a potential loss of career opportunities or indeed the job itself. “It has been made clear that for the next five years after the merger, there will be no fresh recruitment," said Krishna. He claimed that the merger will lead to the closure of more than half the SBT branches and to the transfer of employees to other states.
For the Kerala government, which carries out all major business transactions in SBT, what is worrying is a possible disappearance of regionalism associated with SBT’s lending policies once it is merged.
“The state shares an emotional bond with the SBT. Its disappearance would adversely affect investment in Kerala," chief minister Vijayan said while moving the resolution in the house in July.
Ironically, the SBT took its current giant shape—it is the biggest bank in Kerala—after amalgamating some 11 smaller local financial institutions once, after it was originally formed by the erstwhile Travancore kingdom 75 years ago. It has 1,777 branches, 846 of them in Kerala, and has deposits worth ₹ 8,000 crore, as per government estimates.
The lawsuit also says the SBT management did not follow due processes while approving the merger.
“Without placing the subject matter of acquisition in the board meeting with prior circulation of the details to the directors, they have placed it as a ‘table item’ and initiated steps for acquisition, against the opposition of the directors representing the stakeholders and employees," said the petition, a copy of which was seen by Mint.
“SBT has an expenditure of almost ₹ 1.01 lakh crore per year, almost 90% of it is spent in Kerala. 90 percent of its employees are also Keralites. Through employee salaries, creation of assets, providing loans for agriculture, industry or education, SBT has been pivotal in shaping modern Kerala," wrote senior journalist Anoop Parameshwaran in the Malayalam newsmagazine Samakaalika Malayalam in July.
“The merger casts doubt on such a financial institution... It is about how far the local population will get support when the bank transforms into one with a national outlook," he added.