Bank unions are opposing the government’s decision to merge Bank of Baroda, Vijaya Bank and Dena Bank, alleging that the move is just a diversion from the main issue of NPAs and their recovery from big corporates.
The central problem of the Indian banking industry is the enormous pile of NPAs worth over Rs 10 lakh crore, which have accumulated on account of faulty lending practices and the absence of any strategy to recover the amounts from delinquent corporate houses, media reports quoted All India Bank Officers’ Confederation (AIBOC) as saying.
The absence of strong penal action against the corporate fraudsters like Vijaya Mallya, Nirav Modi, Mehul Choksey etc. reflect the lack of political will on the part of the government, it reportedly said.
“In this backdrop, the announced merger of three public sector banks is nothing but a diversion away from the core issue of NPA recovery. Mergers cannot resolve or clean up the balance sheets; rather the NPAs of the three merged entities would simply add up,” it said.
Opposing the central government’s decision to merge three banks AIBEA General Secretary C H Venkatachalam reportedly said there is no evidence that merger of banks would strengthen the banks or make them more efficient.
He said no miracle happened after the merger of five associate banks with SBI.
“On the other hand, it has resulted in closure of branches, increase in bad loans, reduction of staff, reduction in business. For the first time in 200 years, SBI has gone into loss,” a PTI report quoted Venkatachalam as saying.
National Organisation of Bank Worker’s (NOBW) vice president Ashwini Rana wondered the purpose of the merger is not clear and employees of these banks will be affected.