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Merger of Banks is a murder of Banks - M.B.E.A.

Total NPA of 10 Banks in Gujarat is Rs. 897311 Lakhs


15:04 05/09/2019
Merger of Banks is a murder of Banks: In a big bang announcement, Finance Minister has informed the nation 30th August 2019 that 10 Public Sector Banks ( PNB, Canara Bank, Union Bank of India, Indian Bank, United Bank of India, Allahabad Bank, Syndicate Bank, Corporation Bank, Oriental Bank of Commerce and Andhra Bank) will be merged into 4 Banks

Nationalised Banks – pillars of our economy: Banks were nationlaised in 1969 with a very clear social and economic objective of broad-basing the economy and its development. In the last 50 years, the nationalised Banks have made a phenomenal contribution in building up a strong economy with a visible social orientation. 8000 Branches have become 90,000 bank branches today, out of which 40,000 branches in located in rural and semi-urban areas which were earlier neglected. Credit to priority sector has boosted our economy resulting in achievements like green revolution and white revolution, industrial progress, job generation, rural development, etc. In 2008 when the entire globe was facing financial turmoil and banking tsunami, Indian banking system was safe because of our public sector banks.
Merger of Banks is a diversion from the economic crisis: The country is facing serious economic slowdown and downturn. Banks with their huge resources at their command can play a decisive role to revive the economy. In fact, only last week, our FM has assigned important jobs for our Bank in boosting the economy. The decision to merge and close Banks is a total diversion from these tasks.

Merger is no panacea for problems faced by Banks: Bank themselves face problems due to huge pile of bad loans. While the Public Sector Banks made a total gross profit of Rs. 150,000 crores for the year ended 31-3-2019, because of total provisions towards bad loans, etc. amounting to Rs. 2,16,000 crores, the Banks ended in a net loss of Rs. 66,000 crores. Can anyone believe that merger of Banks will result in recovery of the huge corporate bad loans? Rather, as we have observed after merger in SBI, bad loans in SBI has gone up. Same risk is facing these Banks now.
Globally big banks is a myth: The argument that by merging our Banks, they will become globally bi banks and globally competitive, is a mere myth. Even all our Banks are merged into one Bank, the capital base would be around 4 billion $ whereas most of the global banks operate with capital base of 60 b $, 70 b & 80 b $, etc.

Don’t divert public attention from NPA to mergers: To resolve the problem of bad loans facing the Banks, Government should take tough measures to recover the bad loans. Instead of that, the Government is trying to divert the attention and focus by resorting to merger of banks which is unwarranted. Bad Loans in the 10 Banks proposed to be merged today are Rs. 3,16,632 crores. Whether these bad loans will automatically be recovered if these Banks are merged ?

Impact in Gujarat- All these 10 banks are having network of 1230 Branches in Gujarat.Total Deposit is Rs. 8450527 Lakhs and Advances is Rs.7282276 Lakhs.Gross NPA is 897311 Lakhs.

While total NPA of Gujarat of Nationalised banks is Rs 2600787 Lakhs & Total NPA of SBI (Gujarat ) is Rs. 445515 Lakhs. Total Branches of Nationalised bank is 4006,excluding SBI.

It is expected that after some months nearly 300 branches of 10 banks will be closed down. This will adversely affect the client service and business also.


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