September 08, 2019

PSBs Merger Facilitates Easy Siphoning Off Public Money to Corporates: CITU

THE Centre of Indian Trade Unions (CITU), in a statement issued on September 1,  has denounced the decision of central government to merge 10 public sector banks into four entities, thereby reducing the number of public sector banks (PSB) to 12. It said that the move was utterly destructive.

 CITU said that the exercise is meant for drastically squeezing the public sector banks’ operational areas through inevitable closure of a huge number of bank-branches. It added that the disastrous move will severely affect employment and also the spread-over and availability of banking services to common people, particularly in remote areas, besides further weakening the banks. 

As a result, private sector banks including foreign banks, will have more open field for their business in the urban areas and the vast rural areas will be left virtually without any banking services, CITU decried.  It alerted that the government’s own scheme of direct benefit transfer (DBT) on various welfare measures in the rural areas is destined to get squeezed and become infructuous. It added that the government will virtually deprive the poor of their legitimate benefits owing to non-availability of the bank branches in the rural vicinity.

The CITU recalled that the experience of previous cases of merger of banks established the inevitability of such disastrous consequences. After merger of five associate banks with State Bank of India, around 1000 branches had been closed. Merger of Dena Bank and Vijaya Bank with Bank of Baroda is going to shut down around 800 more branches, CITU said.  A substantial section of those closed or soon-to-be-closed branches are in the rural areas, where the private banks never tread even by mistake, Tapan Sen, general secretary of CITU lamented.

Sen added that such phenomenon of squeezing of operational area of banking services is also going to have a damaging impact on channelising of savings of common people through bank deposits, in the track of developmental activities and projects and employment generating commercial activities. It is rather going to be a provocation or allurement for diverting common peoples’ savings either to speculative market or towards dubious chit-fund instruments, he added.

The CITU said that the merger of banks is being justified by the government on grounds of strengthening and consolidating the concerned banks. But in reality, such merger will further weaken all the banks. Problems of public sector banks emanate from the deliberate default in loan-repayment by the big corporate houses and solution lies in stern action by the government for outright recovery of the huge loan amounts from defaulter corporates with penalty.  

The CITU said that the present government, instead, is busy in legitimising pilferage of bank money by the defaulter corporates through Insolvency and Bankruptcy Code Procedure, forcing the public sector banks to sacrifice substantial portion their legitimate dues just to favour the defaulters. 

The government is actually engaged in the destruction of the country’s financial service network which got widely expanded post-nationalisation of banks and insurance sector. This is detrimental to national interests, CITU remarked.

 The CITU, on the other hand, hailed the proactive move of the United Forum of Bank Unions to launch immediate protest countrywide. They will definitely launch a bigger militant action to resist this destructive game plan of the government, said the trade union leaders and called upon the working class to raise their voice of protest and show active solidarity with the struggling bank employees.