For Immediate Release
A Resolute NO to Merger! Unions and Opposition Unite to Fight Merger of Public Sector Banks!
New Delhi, November 2, 2018: “Under the present government, the Lion in the Make in India has turned into a cat,” said Atul Kumar Anjan, National Secretary of the Communist Party of India.
Citing demonetisation, the dilution of social security like pensions for the bankers, Anjan urged various bank unions in India to unite and resist the anti-people policies of the present government He was speaking at the public meeting titled “Bank Mergers – A Step Towards Reversing Nationalisation” at the Constitution Club of India today.
Kavita Krishnan, Polit Bureau member of the CPI-ML (Liberation), said “The government is misleading people. All its policies are to help the crony capitalists. On the one hand, government promises to create more jobs while on the other it pushes policies like bank merger, which will lead to the loss of jobs.” She stressed that in the run-up to the 2019 elections, the government is doing everything it can to stay in power without thinking about the country’s interest.
The public meeting was jointly organised by All India Bank Officer’s Confederation (AIBOC), and Centre for Financial Accountability (CFA) in the wake of government’s recent decision to decision to merge Bank of Baroda, Dena Bank and Vijaya Bank in hopes of reducing the needed capital infusion into these banks and clean up their balance sheets.
Speaking on the meeting, Com. Thomas Franco, General Secretary, SBI Pensioners Association, said the bank merger affects all of us. He told the audience that bank mergers lead to the reduction in the staff hiring and closing down of branches, thus affecting both the bank employees and the general public alike. He exhorted all the unions and civil society members to come together to oppose this bill tooth and nail as they did on the FRDI bill. It is essential to reach out to the public and the opposition parties so that the issue is raised in the both inside and outside the parliament, he stressed.
The meeting, which was presided over by Gautam Mody, General Secretary of the New Trade Union Initiative, was also addressed by Atul Kumar Anjan, National Secretary, CPI; Prof CP Chandrasekhar, JNU; Kavita Krishnan, CPI-ML Liberation; Dilip K. Pandey, Aam Aadmi Party; Debasis Ghosh, Senior Vice-President, AIBOC; D. Thomas Franco, General Secretary, SBI Pensioners Association; Ravinder Gupta, Senior Vice-President, AIBOC; and workers-representatives from Dena Bank, Vijaya Bank, and Bank of Baroda among others.
The meeting highlighted the rampant unemployment that mergers will cause, the administrative chaos and the peril to the Banking system in particular and Indian economy in general. Debasis Ghosh, Sr. Vice President, AIBOC, pointed out the contradiction of the government promoting the merger of PSBs in the line that bigger is better but at the same time introducing small private banks and payment banks.
Dilip K Pandey, a national spokesperson of the Aam Aadmi Party, assured the bankers that his party opposes the bank mergers and would stand with the bankers to save the public sector banks. He blamed the present government for the crisis in the financial sector.
Prof CP Chandrasekhar, a professor at the Centre for Economic Studies and Planning at the Jawaharlal Nehru University illustrated with examples across the world that the size of banks is no indication of their stability. Reasoning that the revival of the idea of consolidating banks shows the government’s inability to resolve the NPA crisis, he said this situation could have been avoided if development finance banks were not privatised and allowed to enter the commercial banking space. “The government will do the merger but won’t be able to take the problems of the banking sector off its hands. The merger is going to be a failure, and the cost of this failure will be borne by the workers of these banks and the common people,” he added.
The union-representatives from Dena Bank, Vijaya Bank and Bank of Baroda also expressed their views and vowed to collectively fight the merger.
Com Narendra Nath, President of All India Bank of Baroda Federation Officers Federation, emphasised that bigger banks are required for bigger finances, which only a handful of people need. He warned that the recent bank merger is a test case, if they succeed in this, they will inevitably merge more banks. He reminded that we must resist it.
Tapas Kumar Ghosh, Deputy General Secretary of the All India Vijaya Bank Officers Association, reminded the audience that the banks were nationalised to increase reach to rural areas, credit to farmers and small traders and that the PSBs works towards the fulfilment of these social objectives and implement government’s schemes. He expressed worry that since the Return of Asset of the combined entity of the Dena Bank, Vijaya Bank, and Bank of Baroda is negative, will it also be put under the Prompt Corrective Action, which freezes the lending activities.
SS Prasad, General Secretary of the All India Dena Bank Officers Federation, blamed the Board of Dena Bank behind the NPA crisis, he said the Federation analysed that out of 16,600 crore NPA of the Dena Bank, the loan worth Rs 3,600 crore was sanctioned at the branch level. The rest, 78%, was approved by the Board. He further said that out of the total NPA approved by the branch, only 6 per cent belong to the Priority Sector Lending.
The Union government is pushing through the merger of PSBs with a misplaced notion that fewer stronger banks will be “too big to fail”. It’s ironical that the news of the bank merger was announced on the 10th anniversary of the fall of Lehman Brothers, the erstwhile fourth largest Bank of the United States, which makes us seriously question the lessons that the government has learnt from the global financial crisis. In the aftermath of the crisis of September 2008, prominent economists have advised a shift towards smaller banks.
Post the neo-liberal banking reforms, there have been 32 mergers, all of them of failing private banks with the public sector banks. In 1993, however, RBI forced a merger between Punjab National Bank (PNB) and New Bank of India, as the latter had low liquidity rate. PNB suffered its first net loss of Rs.96 crore in 1996, following the merger. It had to face several problems and litigation relating to absorbing the workforce of New Bank of India in its stream. It reportedly took PNB five years and more to get over the merger effect. Oriental Bank of Commerce met a similar fate when the private Global Trust Bank was merged with the former in 2004. Similarly when the lessons of SBI merger are clear as daylight, and when global experiences of big banks are glaring bright, it is intriguing that the government is rushing to merge more banks. Why is the government pushing for this without initiating a public debate?
The recent Parliamentary Standing Committee on Finance highlighted that 95% of the GM level employees, 75% of the Deputy GM level employees, and 58% of Additional GM level employees are going to retire by 2019-20. A policy like a merger is only going to further retrenchment of bankers and weaken the Banks.
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