Money & Banking

Bank unions plan to launch nation-wide protests against merger

M Ramesh Chennai | Updated on August 31, 2019 Published on August 31, 2019

The United Forum of Bank Unions has planned a massive, nation-wide demonstration to protest against the mergers of public sector banks. The forum comprises four officers unions and five non-officers’ unions, and represents a million bank employees.

“There will be serious strikes; we are going on a massive confrontation with the government,” CH Venkatachalam, General Secretary, All-India Bank Employees Union (AIBEA), told BusinessLine. He termed the proposed bank mergers “ill-timed wrong decisions”.

Stressing that the biggest problem with the banking industry today is that of non-performing loans, Venkatachalam wondered how merging two banks will bring NPAs down.

“In fact, it will slow down NPA recovery by diverting attention to other issues related to consolidation,” he said. Another senior leader of the forum wondered why the government wanted to merge banks to create large entities while it was also encouraging small banks by giving out licences.

He pointed out that the large size of the bank was no guarantee against its failure, as witnessed in the fall of Lehmann Brothers in 2008. Even the merger of State Bank of India with its erstwhile associate banks could not prevent it from reporting losses, he noted.

Another source stressed that all banks, without exception, have been making operating profits consecutively — net losses are only because of provisioning for bad loans.

He said it was a myth that customer service would remain the same or improve after merger of banks when the mergers result in closure of thousands of branches.

Published on August 31, 2019

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