The Hindu Business Line : `Govt must allow PSBs to take over private banks'

The All-India Private Sector Bank Officers' Federation (AIPSBOF), a wing of All-India Bank Officers' Confederation (AIBOC), has urged the Union Government to officially permit the public sector banks (PSBs) to negotiate with promoters of the private banks and to take them over in the larger interests of the economy.

Opposing the proposed merger of Lord Krishna Bank with Centurion Bank of Punjab, Mr T.R. Bhat, President of AIPSBOF, said in a press release here that the proposed merger once again exposes the `double standards' of the Government with reference to larger issues of consolidation of banks and financial inclusion.

The Government and the Reserve Bank of India have been propagating mergers of public sector banks. "But when it comes to the question of takeover of a private sector bank by a PSB, the Government does not allow it," he said.

"Only when a bank becomes sick and depositors' interests are to be safeguarded, the Government and the RBI force a PSB to take over the sick bank as it happened in the case of Nedungudi Bank Ltd and Global Trust Bank Ltd," Mr Bhat said.

It is learnt that several North-based PSBs would like to take over the South-based private banks, if the RBI and the Government permit them. "Why are they not permitted to go ahead?" he asked.

There are still sizeable pockets in Kerala and Tamil Nadu, where only these private banks serve the people. If they are taken over by the new generation banks or foreign banks the resources will be diverted to more profitable avenues. The thrust on financial inclusion can get intensified if these banks are taken over by PSBs and not by new generation banks, Mr Bhat added.

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