Describing the merger of State Bank of Travancore (SBT) with the State Bank of India (SBI) ‘unconstitutional,’ the State government filed an affidavit recently in Kerala High Court to declare the acquisition ‘unwarranted.’
“There is no rhyme or reason for annihilating the SBT, which is considered as the national bank of Kerala. The sixth respondent (Kerala government) fully supports the stand taken by the petitioner (Save SBT Forum),” the government said in its affidavit submitted by Chief Secretary S.M. Vijayanand. It pleaded “to declare the acquisition of SBT by SBI as unwarranted and also declare that all procedures and decisions taken by the SBI and SBT are unconstitutional.”
The State is a minority shareholder in SBT with 0.89 per cent stake. The SBT is a listed entity on BSE, India’s premier stock exchange.
“Apart from number of shares held by the State, the SBT plays a pivotal role in the public finance of the entire State…the government carries out all financial transactions, including various subsidy schemes…through Direct Benefit Transfer (DBT) being operated with the help of SBT,” it said.
Market share
The SBT is having a market share of 23 per cent of deposit and 18 per cent of advance in Kerala.
It said the SBI is trying to implement the merger of SBT without complying with the provisions of Section 35 of the State Bank of India Act.
Describing this as an unholy merger, the government said the negotiating officer (S. Adikesavan) appointed by the SBT to finalise the scheme of acquisition was transferred unceremoniously for taking a stand in favour of the SBT.
The government said there was no item in the agenda for discussing any transfer of assets and business of the SBT in favour of the SBI. When the director board met, there was no item on the agenda, “the Managing Director of SBT introduced an ‘out of agenda’ proposal of acquisition of the SBT by the SBI and to seek approval of the board to enter into negotiations with the SBI.”
The government noted that out of seven associate banks of the SBI, the State Bank of Sourashtra and State Bank of Indore were acquired by the SBI in 2008 and 2010.
Though the purpose of acquisition was for better and efficient banking facilities to common persons, “the number of customers which were originally in these two subsidiaries had lost confidence and closed their accounts in large numbers.”
