Assam unit of the All India Bank Officers’ Confederation opposes PSUs's merger

Andrew Cummings
September 3, 2019

According to the official website of the public-sector bank, on maturity periods like 7-14 days and 15-29 days, PNB is now offering an interest rate of 4.5 per cent to general public and five per cent to senior citizens on fixed deposits of up to Rs 2 crore, as opposed to the previous rate of five and 5.5 per cent, respectively. Almost 88 per cent of all PSB business will be with these consolidated banks. "The government will keep its stake at 51 per cent in the nationalised banks", Kumar said after the announcement of the merger of PSU banks.

In addition, Andhra Bank and Corporation Bank are to merge with Union Bank, and Indian Bank will merge with Allahabad Bank.

Earlier, responding to the government's plan, the All India Bank Employees Union has said the amalgamation would lead to closure of banks besides job losses. "The state-owned banks can now look forward to efficiency gain, higher profit, better services to customers and also more benefits to their employees", he said. Is this the formula for India to reach $5 trillion economy target? Union, Andhra & Corporation Banks will become one. This will make it the second-largest Public Sector Bank in the country with Rs. 18 lakh crore business. Credit Suisse still favors the shares of private-sector lenders such as ICICI Bank Ltd., Axis Bank Ltd. and HDFC Bank Ltd.

In a Mint report, they have said that the decision to merge United Bank with Punjab National Bank with their headquarters in Kolkata and Delhi respectively defies logic in the same way as that of merging Canara Bank and Syndicate Bank having strengths in the same regions.

As with the price movement in the case of SBI that merged with its associate banks and BOB that merged with Dena and Vijaya Bank, there will a positive movement at first, which can then be guided by operational performance post merger comes into effect.

Finance Minister said that in place of a fragmented lending capacity with 27 PSBs in 2017, there will be only 12 state-run banks. "The measures announced to improve corporate governance and groom leadership, if followed through with the right intent, resources and commitment, can go a long way in addressing the challenges that PSBs have been historically facing", said Prakash Agarwal, Head, Financial Institution, at India Ratings and Research (Fitch Group). "In our view, the announced capital infusion is unlikely to be sufficient for taking these banks out of PCA in immediate future". Apart from this, the government announced Rs 55,250 crore as a capital infusion in the PSBs.The government announced four massive bank mergers today.

The government will ensure that no bank employee is hurt by the decisions, Finance and Banking Secretary Rajiv Kumar said at the briefing.

Yet the Union government was merging 10 banks and creating four banks out of them.

"Further, the decision to empower bank boards and operational flexibility in hiring from the market will prioritise robust risk management practices in decision making". However, given that the merged banks are on similar technology platform, the integration should be smoother.

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