Who will benefit from bank mergers?

Come 1 April,  and with the advent of the new financial year,  two public sector banks -  Vijaya Bank and Dena Bank -  are going to disappear from public view.    Both will become part of Bank of Baroda.  This merger operation is conducted with the blessing of the central government under the pretext of saving the banking sector. The Centre which earlier inititiated steps that caused dire damage to the economy through steps like demonetisation and merger of State Banks,  is once again in the shadow of doubt about the inscrutable motives behind this move.  

The baffling hurry to merge Vijaya Bank,  which has been making profits over the last few financial years,  with the loss-making Bank of Baroda,  is also suspicious.  Vijaya Bank is one of the leading banks that the socially backward sections and farmers could approach with ease ,  has been providing smooth services and with relatively fewer non-performing assets.   It is the only bank that distributed dividends to shareholders last year.  On the other hand,  Bank of Baroda is a favourite of the corporate sector and its customer base mainly consists of big-time industrial groups and business tycoons.   And because those who flee with huge debt arrears are mostly from this customer segment,  the bank suffers from huge unrepaid debts too.   However,  authorities have not so far come up with any plausible explanation about merging a profit-making bank into a loss-making one.

The big question is which of the problems plaguing the banking sector will be solved by this government formula.  The damage caused by the much-hyped merger of State Banks, should have made the government think twice before venturing on such a step.   This was implemented callously ignoring protests by bank employees,  and a near-unanimous resolution by the Kerala Assembly (the only dissenter being the BJP MLA).   The claim that State Bank of India would be made a gargantuan bank,  led to a thoughtless merger and eventually to a loss for the first time in the history of State Bank.  And the popular face of State Bank of Travancore and sister regional banks as people's own banks,  disappeared with their merger.   This distancing from the people became complete with the introduction of excessive charges for various banking services by the amalgamated entity.   As a result, lakhs of common people deserted State Bank.   The parties that hit the bonanza from this,    are  the private banks owned by groups like Reliance,  who have been controlling the Centre's economic policies.  And the very blueprint of SBI payment bank is in tune with the interests of Reliance.

In a related move,  the government is now trying to make it a liability of the banks to rescue Jet Airways, a private airline that nosedived into losses due to inefficient management, terming rescuing it as ' national interest'.    The directive is to hold Jet in the sky under the leadership of State Bank of India.  When a private enterprise that had pocketed profits with scant obligations to the country or the common people,  goes into loss for its own faults and that burden is transferred to the public sector banks and thereby to the tax-paying public,  that constitutes nothing but deceipt.    But never until now  has the government put forward a similar formula to salvage public sector banks.

The new merger is being pushed forward without heeding,  as it happened during the State Bank mergers,  the country-wide strikes by bank employees,  or the legal cases pending in courts.  Under cover of the merger scenario,  a large number of staff may lose their jobs.  And the apprehension of the employees that there may be retaliatory steps and unpleasant work atmosphere,  are not out of place.   Nor can we lose sight of the possibility of the stark discrimination that the staff will have to experience,  similar to what happened to those from associate banks following State Banks' merger.   For all the specious justifications the government may offer,  protection of the public sector banks and bank employees is our responsibility,  and that constitutes national interest.   And it is too early to forget that during the ridiculous and deceptive economic 'reform' of demonetisation,  it was the bank employees who held the country's streets safe from bursting in revolt.