Foreign control a threat to Kerala-based banks: VS

THIRUVANANTHAPURAM OCT. 26. The Leader of the Opposition, V. S. Achuthanandan, has alleged that some foreign banks were trying to take over the Federal Bank and the South Indian Bank, the State's leading private banks.

In a statement here today, he said the ICICI Bank, which was having stakes in these two banks, had reportedly decided to sell its shares to foreign banks. This would ultimately lead to the foreign banks taking control of these institutions, he said.

As per the latest banking statistics, the Federal Bank and the South Indian Bank had with them deposits to the tune of Rs. 16,867 crores, including Rs. 6,887 crores from the non-resident Indians.

These banks had also deployed credits worth Rs. 9,448 crores. They had fixed assets worth Rs. 700 crores and 824 branches spread across the country, he said.

Together, these banks had disbursed over Rs. 4,500 crores as loans in the State alone. In the gold loan area, the leading bank in the State was the Federal Bank.

The ICICI Bank had 21.35 per cent stakes in the Federal Bank and 11.38 per cent stakes in the South Indian Bank, he said.

Mr. Achuthanandan said that, at the prevailing share prices, the ICICI Bank would get hardly Rs. 75 crores by selling its entire stakes in the Federal Bank.

It was difficult to believe that the disposal of these shares would benefit the ICICI Bank. The sale could probably be under pressure from the Union Government, which wanted to favour the concerned foreign banks, he alleged.

``It looks as though the top people at the Centre have been bribed. I urge the Prime Minister to intervene in the matter and persuade the ICICI Bank to give up its move to sell its stakes in the two banks to foreign banks'', he said.

Mr. Achuthanandan said the proposed deal should be a matter of concern to the employees of these two banks. They might face retrenchment once the control of their banks fell into the hands of foreign banks, he said.

He cited the example of the Vysya Bank, where the employee strength was slashed from 4,000 to 1,000 after its takeover by a foreign bank.

Mr. Achuthanandan said that the deposits now with these banks were predominantly the contribution of the people of the State.

The control of these banks falling in the hands of a foreign entity could never be in the interest of the State, because the priorities and focus of the banks would be entirely different then, he said.

Recommended for you