The Hindu Business Line : Banks can't become strong by just mergers, say unions

Responding to the recent plea for consolidation among top public sector banks, given by the Union Finance Minister, Mr P. Chidambaram, they say, they have no objection, "if the private sector banks which are tottering according to the Government can be taken over by public sector banks."

Mr C.H. Venkatachalam, Convenor, United Forum of Bank Unions, said, "We do not agree with the view of the Finance Minister that our banks need to be merged. Banks cannot become strong only by just mergers. Even if all the 27 public sector banks get merged into one, we will not be equal to any of the world's big banks in terms of capital or resources. The total business of the merged banks will remain the same."

He said, "If we are to give finance to international needs, it will be certainly at the cost of Indian advances. So our domestic economic development will suffer. Even now Government talks of doubling agri-credit, rural credit etc. By going global, our local needs will be ignored."

Responding to the Minister's call for consolidation given the need for infrastructure finance, Mr Venkatachalam, said, "This can be given by banks under existing consortium arrangement. There is no need to merge the banks for this purpose. The simple hidden agenda is that foreign banks are not interested to buy the Indian public sector banks with such huge number of branches, staff, local business commitments, etc. So merger would make our banks leaner through closure of branches and reduction of staff, which would make it attractive for foreign buyers. Our banks deal with huge money of the ordinary common people and this cannot be placed in the casino for manipulation and speculation in the name of global competition."

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