The Hindu Business Line : Merger of banks

This refers to the Editorial on “Bank on consensus” (Business Line, January 22). The policy of consolidation of public sector banks (PSBs), being pursued by the UPA Government, is in the backdrop of global competition that is expected to become highly competitive in 2009 on account of WTO commitments.

The Government wants to turn PSBs into global banks. The Finance Minister, Mr P. Chidambaram, in 2004 had said that through mergers, banks can be made more competitive. This may affect the services for the common people as reforms in the banking sector may result in financial exclusion for many.

This being the case, bank mergers will further alienate the common man from the banking ambit as these banks may turn into funding agencies for corporates. As more than 70 per cent of the bank deposits are from household savings, bank unions are demanding continuance of mass banking practices. The new generation banks have created a new market for themselves ignoring the needs of the ordinary masses. More than technology, customer service with social commitment is the need of the hour.

K.S. Krishna, Ernakulam

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