Finance minister Nirmala Sitharaman said plans is to create fewer but stronger global- sized banks (Pradeep Gaur/Mint )
Finance minister Nirmala Sitharaman said plans is to create fewer but stronger global- sized banks (Pradeep Gaur/Mint )

Mergers lack logic, will further destabilize economy: Bank employee unions

  • Finance minister Nirmala Sitharaman said plans is to create fewer but stronger global- sized banks for building a $5 trillion economy
  • The move will bring down the number of state-run banks to 12 from 19 after the merger of Dena Bank and Vijaya Bank with Bank of Baroda effective April 2019

MUMBAI : Bank unions on Friday opposed the mega merger of 10 state-run banks into four saying the move is bereft of logic and lacks any rationale.

While announcing the merger, finance minister Nirmala Sitharaman said plans is to create fewer but stronger global- sized banks for building a $5 trillion economy.

The four mergers are Punjab National Bank will amalgamate with itself smaller peers Oriental Bank of Commerce and United Bank of India, to create the nation's second- largest lender; Syndicate Bank will merge with Canara Bank; Union Bank of India will take over Andhra Bank and Corporation Bank; and Indian Bank will merge with Allahabad Bank.

The move will bring down the number of state-run banks to 12 from 19 after the merger of Dena Bank and Vijaya Bank with Bank of Baroda effective April 2019. As of April 20-17, there were 27 state-run banks in the country, right before the SBI merged with itself its five associate banks along with the Bharatiya Mahila Bank.

"The proposals which the government has moved are unmindful since it has no logic or rationale. Neither, it is the case that a weak bank is merged with a strong one nor geographically compatible banks are being merged," All-India Bank Employees Association said in a statement.

The unions further said United Bank, headquartered in Kolkata is being merged with the Delhi-based Punjab National Bank, while Syndicate Bank is being merged with Canara having network in same geographical areas.

The unions said the government has come out with merger proposals at a time when the economy is passing through a rough weather-as the announcements came an hour before the government reported that the economy slowed to the lowest level in 25 quarters in the April-June period clipping at a low 5 percent.

"At this point in time, when stability is the need of the hour, the government itself is attempting to destabilise the finance and economy," the statement said.

The union said in the process of merger, SBI had closed over 1,000 branches and in case of Bank of Baroda, more than 500 branches are being closed.

"On one side the government wants to implement Jan Dhan, but how it is possible to implement the same by closing down the branches?" they wondered and announced that they will observe black day on Saturday and threatened to launch more protests go ahead.

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