Bank officers body asks govt to put banks merger on hold

The All India Bank Officers’ Association (AIBOA) has urged the Narendra Modi government to put on hold the proposed merger of public sector banks, saying successive mergers from 2008 to April 2017 have led to branch closures, job losses and “added to the bad loans portfolio bulging”.

The AIBOA, a representative body of bank officers working in public, private, regional, rural and cooperative banks, further said that there is already subsisting case pending in the Supreme Court filed by it and that the Union government is still to respond to the court’s notice.

Finance Minister Nirmala Sitharaman on Friday announced merger of various public sector banks and thus the total number of Public Sector Banks will come down to 12 instead of 27 earlier.

“The Public Sector Banks carrying the banking business through 1,41,000 bank branches, having the significant presence in rural and semi urban segment will certainly face severe problems due to branch closure. The experience of Associate Banks successive mergers from 2008 till April 2017 had led to branch closures, job losses and added to the bad loans portfolio bulging,” the AIBOA said in a statement.

“The national economy is under severe distress. The sickness had set in from November 2016 due to ill-advised move of the government where banking activities were brought to total halt due to demonetisation. The Goods and Services Tax (GST) system had added further woes to the normal economic activities of the countries,” it said.

“To top it all, introduction of Insolvency and Bankruptcy Code to bail out the corporate through NCLT was another wrong move. The decision of NCLT to impose lot of sacrifices in the recovery was another step to facilitate the big borrowers not to repay the loans to the banks,” it added.

The bank officers’ body demanded to know if the expansion of economy will be possible by shutting the doors of banks and their branches, and pointed out that today each bank branch serves a population of 10,000, which is much higher than the ideal figure.

It suggested the economy should be revive with required support to small and medium industries, initiate recovery procedure from defaulters, expansion of the banks network instead of banks’ mergers and utilise the workforce of the banking system to evolve new role for banks.