New Delhi: A day after the Cabinet decided to set up ministerial panel to expedite consolidation among public sector banks (PSBs), bank officers' union AIBOC has condemned the move saying it is a move towards privatisation.
"We have time and again criticised forced mergers and we will continue to protest such ill conceived plans of merger of PSBs by government, Niti Aayog and RBI which can wreck havoc on India's financial mainstay," All India Bank Officers Confederation (AIBOC) said in a statement.
There have been innumerable instances where mergers and takeovers of banks have been unsuccessful because of reasons like unsuccessful consolidation of banks working systems and methodology, asymmetric organisation restructuring, improper and hasty communication, inappropriate human resources integration, and lack of cultural consideration, it said.
Citing example of SBI, AIBOC General Secretary D T Franco said when the bank declared its results on May 19, analysts discovered, to their horror, that the path to global greatness lay through a minefield of subsidiaries' losses, estimated at Rs 5,792 crore in the quarter ended March 2017 and Rs 10,243 crore for the full year.
Excluding non-banking SBI subsidiaries such as life and general insurance, which reported annual profits of nearly Rs 2,000 crore, the losses would have been higher, the statement said.
SBI recommended dividend of Rs 2.5 per share for 2016-17 that will entail an outflow of Rs 2,073 crore, far exceeding the consolidated net profit of just Rs 241 crore, it added. "We can well understand the fact that the merger of public sector banks is a part of the government's broader plan to privatise the public enterprises to attract foreign investment," Franco said.
On Wednesday, the Union Cabinet decided to set up an Alternative Mechanism to fast track consolidation among PSBs to create strong lenders. The move to create large banks aims at meeting the credit needs of the growing Indian economy and building capacity in the PSB space to raise resources without dependence on the state exchequer.
