Government’s Decision to Merge Banks - Retrograde and Unwarranted
The National Secretariat of the Communist Party of India issued the following statement on August 31, 2019:
Yesterday, Finance Minister has announced that 10 major public sector banks will be merged into 4 Banks to make them big banks so that these big banks will help the Indian economy.
This decision is totally unwarranted and announced at an inappropriate time. When the country’s economy is in shambles, Banks have a very important role to play in boosting the economy. This is the top priority today. Accordingly, Government announced various measures in their attempt to revive the economy from the slide down. But unfortunately, the whole attention is now being diverted from revival of the economy to merger of Banks. This is a deliberate attempt to shift from real issues facing the economy.
Secondly, Bank themselves are facing a major challenge to recover the huge bad loans. Corporates are deliberately cheating the banks. Due to this, the Banks are made to show losses though all the public sector banks are earning gross profit. Hence taking tough measures to recover bad loans is the main job before the Banks and the Government. But the proposed move to merge Banks will shift the attention of the banks to issues connected with merger and bad loan recovery will take the back seat.
Thirdly, in the previous merger of Banks with SBI, we have seen that 7000 branches were closed down. Same will happen now also. When Government talks of Jan Dhan Yojana to take banking to every India, closure of branches due to mergers will take banking services away from common people. Hence this is a retrograde move.
Government claims that merger will make our Banks big. India does not need big banks. Globally big banks were found to be very risky as it happened in USA. We need our public sector banks to effectively serve the people and we do not need such big banks which will only help the big corporates.
Hence merge of banks is unwarranted and is not in our country’s interest. Government should reconsider its decision. The CPI extends its support to the agitation of the Bank employees and their unions.