The Hindu : Business : Move for merger of banks opposed

Online edition of India's National Newspaper
Thursday, Sep 18, 2008
ePaper | Mobile/PDA Version

Business

Business

Move for merger of banks opposed

Special Correspondent

Unions say more branches needed

Unions plan two-day strike on September 24 and 25
`Privatisation will affect economic development’

KOCHI: The United Forum of Bank Unions, an organisation of several bank unions, has raised serious objections to the policies followed by the government in the banking sector. The Forum is planning to organise a two-day strike on September 24 and 25.

The Forum convenor V.J. Johny said the government and bank managements wanted to merge the 27 public sector banks into five or six banks in the name of global competition.

The public sector banks were not meant for global competition as their main role was to create the country’s own economic development.

Even by mergers, the banks won’t become stronger in comparison to big global banks. India needed more bank branches and not consolidation. Mergers would result in closure of thousands of bank branches, he said.

‘Open attempts’

There were open attempts suggesting privatisation of public sector banks. Privatising the banks would amount to privatising the huge savings of the common people that are available in these banks as deposits.

Privatisation would result in stopping priority sector loans to agriculture, small and medium industries, rural development, poverty reduction and employment generation. Hence it would affect the broad economic development, he said.

Commenting on the move for unrestricted foreign direct capital in banks, he said that under Section 12(2) of Banking Regulations Act, there was a ceiling of 10 per cent on the voting rights of the foreign direct investors in banks.

Bill

The government had introduced a Bill in parliament seeking to delete Section 12(2) of the Act.

It showed that the government was waiting for an opportunity to push through the amendment which would enable 74 per cent FDI to enter the banking sector with full voting rights. Such a move would make the banks vulnerable to be taken over by foreign capital.

The total capital of 26 private sector banks is Rs.4,200 crores while they have a total deposit of Rs.6,00,000 crores. In the 27 public sector banks, the total capital is Rs.12.315 crores whereas the total deposits are Rs.24,00,000 crores, he said.

Printer friendly page
Send this article to Friends by E-Mail

Business

News Update

Stories in this Section