The large-scale mergers and privatization that the centre is planning in the country’s banking sector has triggered great concern among customers and employees. The move envisages merging of nine public sector banks into State Bank of India, Punjab National Bank and Canara Bank to form three large banks. Government sources say that the mega bank merger will begin by the end of the next financial year. The move, nevertheless is aimed at enabling them to compete with foreign banks, could create repercussions going beyond imagination. Alongside making banking inaccessible to common people, this will make workload and bank environs worsen in the remaining branches. Bank mergers are not new in the country. Earlier, all state banks, including SBT, were merged with SBI. It has not been long since Andhra Bank and Corporation Bank merged with Union Bank, Syndicate Bank with Canara Bank, and Dena and Vijaya Banks merged with Bank of Baroda. Oriental Bank of Commerce, Allahabad Bank, etc. also merged and disappeared. The real objective behind mergers of many banks back then, nevertheless profitable and relied by famers and small businesses, were to shift the liability of banks in debt from giving loans to billionaires.
Apart from mergers, the privatization of banks in the country is actively underway. IDBI Bank in which the central government and LIC officially had a large stake has been privatized. SBI and seven private banks, on the instructions of SBI, rescued Yes Bank when it went bankrupt by injecting a large amount of capital. Later, Japan’s Sumitomo Mitsui Banking Corporation (SMBC) took over Yes Bank. Singapore's DBS Group had also taken over Lakshmi Vilas Bank. Emirates NBD is preparing to buy a majority stake in Mumbai-based RBL Bank, which has a tradition of decades. Other big acquisitions and share sales are in the pipeline. Many big players are eyeing Federal and Dhana Lakshmi Banks in the state. Lord Krishna Bank in the state passing on several hands ended up in HDFC. Fairfax in Canada had purchased a stake in Catholic Syrian Bank many years ago. The central government is taking these steps forgetting the fact that when the world underwent financial crisis leading to the collapse of global giants like Citibank in the US, the public sector banks kept our country from the worst. Big banks have no interest in ordinary, rural and farmer accounts. Recently, two major big banks in the country imposed a minimum balance requirement of Rs 50,000 in the account.This means that ordinary people who withdraw Rs 500 and Rs 1,000 from ATMs are not welcome there. When ordinary people are driven away like this, the usurers and black marketers will once again fill the void.
The Centre’s move including merger of public sector banks and allowing large foreign banks to acquire private and scheduled banks will eliminate all the benefits that society achieved through nationalization of banks. This suggests a shift from mass banking to class banking. While small borrowers are being tied up with laws like SARFAESI, corporate loans worth crores continue to be written off. It goes without saying that the merger will lead to widespread closure of branches, voluntary retirement and compulsory retirement. The decline in number of banks will also adversely affect services. Customers will be forced to accept unilaterally imposed service charges and penalties. The banking sector is heading from nationalization to privatization and eventually to foreignization. This will adversely affect not only for our economy but also the common people. This is not at all befitting move for a government that wax lyrical about the poor.