A day after the RBI put in public domain a draft scheme of the merger of Lakshmi Vilas Bank (LVB) with the subsidiary of Singapore-based DBS, public sector banks’ (PSBs’) officer union AIBOC on Wednesday said the amalgamation was not in national interest, and demanded that the merger be consummated with a PSB.
The proposed merger of cash-strapped LVB with DBS Bank India seemed to be a ploy to provide entry of foreign banks into the country in a big way, All India Bank Officers’ Confederation (AIBOC) president Sunil Kumar said.
The Indian banking sector provides huge opportunity for growth, so the foreign banks have been looking at inorganic route to expand their presence for long, he said.
Mr. Kumar expressed apprehension that the unbridled entry of foreign banks “would lead the country into economic slavery and they will plunder the resources“.
He added that as a stakeholder, AIBOC requests the Reserve Bank of India (RBI) to re-think its stand on the proposed amalgamation in the national interest.
According to the draft scheme of amalgamation floated by the RBI on Tuesday, it proposed to merge the beleaguered private sector lender LVB with DBS Bank India Ltd (DBIL), the local unit of Singapore-based DBS Holdings.
“DBIL has a healthy balance sheet, with strong capital support. Although the DBIL is well capitalised, it will bring in an additional capital of Rs 2,500 crore upfront, to support credit growth of the merged entity,” the RBI had said.
“Old-generation private sector banks have been serving the nation before independence and they have been almost working as PSBs in this country,” Mr. Kumar said.
He added that thus, it should be merged with any public sector bank (PSB) to retain their character rather than a subsidiary of foreign bank.
