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Sarbajeet K. Sen

The Government will not direct the merger process. Its role as a stakeholder will only be of a facilitator.

New Delhi , Nov. 17

IN a move that could substantially take away the sting from those resisting the Government's intent to merge public sector banks, the Ministry of Finance has clearly indicated that consolidation moves will not involve lay-offs or even voluntary retirement scheme (VRS).

"The merger process should not contemplate any loss of jobs or voluntary retirement (schemes)," the Finance Ministry has said in a note on bank consolidation prepared for the Finance Minister, Mr P. Chidambaram's meeting with the Chiefs of public sector banks (PSBs) to be held on Friday.

Laying down a set of loose guiding principles for the merger process, the Ministry has said care should be taken in determining the share-swap ratios. "Due diligence has to be carefully undertaken to ensure that the swap ratios and long-term liabilities of the merging entities are adequately taken care of," the note has said.

With efforts on to build a wide political consensus on the merger, Mr Chidambaram is also likely to urge banks to remain battle-ready so that they can take the plunge immediately after obtaining the green signal. "In case the management feels that the bank has the strength for either to be a consolidator or a consolidatee, it must do a detailed due diligence for synergy with any partner bank," the Finance Ministry has said.

However, it has clearly stated that moves towards merger should be backed with efforts to evolve consensus among employees. "To accelerate the process of consolidation, it is necessary that we take all stakeholders in the process with us. It is not sufficient for boards to decide on consolidation or otherwise, unless the bulk of the organisation is convinced about the efficiency of the merging process," the Ministry has said.

It has said that "unions must be sensitised about the benefits that are likely to accrue to any participating bank in the merger process and how its strength can be enhanced or its weaknesses be adequately covered up to ensure that the merged entity is capable of taking on global competition."

The Government has, however, once again reiterated that it would merely act as a `facilitator' and that merger proposals should evolve from the banks themselves. "The Government will not direct the merger process. Its role as a stakeholder will only be of a facilitator. In case the management feels the need for merger, the merger process has to be board-driven," the Ministry has said.

While the Government has been strongly expressing itself in favour of bank mergers, the Left parties that provide outside support to it are yet to be convinced about the rationale behind such moves and the benefits thereof to the general public.

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