Bank mergers unnecessary

Not banks but NDA Government needs 'Prompt Corrective Action' (PCA). One million bank staff across the country observed one day strike on December 26. They registered their resistance to the merger of banks and demanded action against notorious and influential wilful defaulters. The latest merger underway is that of Dena Bank with Bank of Baroda and Vijaya Bank that is following the controversial merger of Associate banks with the SBI.

The reasons stated by RBI and IBA on behalf of the Government for mergers, may appear holier. But the truth is otherwise. A wrong medicine is being administered to a chronical and real disease of banks that is called 'Non-performing Assets".

Post-merger, SBI for the first time since inception in 01.07.1955, registered losses. It is a myth even globally that big banks succeed and small one cannot sustain. All the banks in India by and large are able to work out net profits which is equal to their income over expenditure. 

The fact is that provisioning for NPAs are turning banks into 'red'. The politico-business nexus is the reason for the astronomical rise of NPAs of Rs  2,24,000 Crores in 2014 to  Rs 10 lakh crore in 2018. More pathetic is that the NDA Government at the Centre written off bad loans to Corporates worth Rs 3.10 lakh crore.

The talk of merger in the present Dena Bank case started with disputed 'Prompt Corrective Action' (PCA) served on 11 Public Sector Banks by RBI. The subject of NPAs and mergers must be thoroughly discussed by IBA/RBI with the United Forum of Bank Unions (UFBU), the major stakeholder in banking industry. 

 - A Raghunatha Reddy, Kadapa