Bank mergers: No miracles will happen: AIBEA
IANS 18 September 2018
Miracles do not happen by merger of banks but result in higher bad loans as it has happened in the case of State Bank of India (SBI), said a leader of the All India Bank Employees Association (AIBEA).
Opposing the central government's decision to merge Bank of Baroda, Dena Bank and Vijaya Bank, C.H. Venkatachalam, the AIBEA General Secretary, said:
"Firstly, there is no evidence that merger of banks would strengthen the banks or make it more efficient."
He said no miracle happened after the merger of five associate banks with SBI.
"On the other hand, it has resulted in closure of branches, increase in bad loans, reduction of staff, reduction in business. For the first time in 200 years, SBI has gone into loss," Venkatachalam said.
According to him, the bad loans of five associate banks of SBI as on March 31, 2017 were about Rs 65,000 crore and that of SBI Rs 112,000 crore -- that is a total of Rs 177,000 crore.
Post merger, SBI's bad loans in 2018 increased to Rs 225,000 crore, he said.
The banking industry's bad loans as on March 31, 2018 stood at Rs 895,600 crore.
"The total bad loans in Bank of Baroda, Dena Bank and Vijaya Bank is around Rs 80,000 crore. A merger of these banks will not help to recover the bad loans. On the other hand, the focus will be shifted to merger issue and that is the game plan of the government," Venkatachalam said.
According to him, the need of the hour was tough measures to recover bad loans.
"Already, the government's policy of Insolvency and Bankruptcy Code to resolve NPAs (non-performing assets) is resulting in huge haircuts for the banks," Venkatachalam said.
He said out of 21 public sector banks, 19 were in loss on account of bad loans and provisions for bad loans.
The 21 banks put together, as on March 31, 2018 had posted an operating profit of Rs 155,565 crore. But due to provisions for bad loans of around Rs 270,000 crore, there was a net loss of Rs 85,000 crore, he said.
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6 years ago
Observation of the AIBEA is 100% correct. It is an exercise of the RBI just to camouflage its own blunders in failure to appropriately and timely handle the incompetent Boards of Directors of the Banks.

Rather, merging of the banks may create more uncontrollable mess.

It would have been more appropriate had the banks been privatized. Permutation and combination of the Boards by substituting the set of incompetent management with another incompetent management cannot be the effective remedy. It would be just an eyewash exercise on the part of the RBI.

Vasant Kulkarni
6 years ago
Replied to Vasant Kulkarni comment 6 years ago
You can wait only for the worst to happen by making the PSU banks more bulky to be handled by the incompetent management. Your hopes cannot sustain.
Dr.Dhananjaya Bhupathi
6 years ago
1. Entire NPAs, created so far by CONG LEAD UPA + BJP LEAD NDA shall go under carpet.
2. 12.5 lac ‘honest to the core + hard working bank employees’ mobilized & accounted for Rs.114 lac crores of deposits OF Indian citizenry + Rs.30 lac crores of investment in Govt. securities created NPAs worth Rs.50 lac crores shall be going under carpet; so that fresh loot shall commence.
4. A sick Finance Minister with a transplanted Kidney with ‘no healthy substitute’/nor competent advisors[s] from the BJP/RSS cadres nor from amongst retired visionaries from RBI/PSBs/IAS/IFS.
5. With all the infirmities, BJP LEAD NDA is paving the way to CORRUPT CONG LEAD NDA to take reins of India for the next 2 decades.
6. Unfortunately, none in BJP/RSS can assist & catch up Modiji’s vision to put Indian economy on ’the rails of progress’ with bright future for the teaming millions of THE INDIAN YOUTH.
Replied to Dr.Dhananjaya Bhupathi comment 6 years ago
You cannot pin hopes on retired IAS & IFS Officers. As per my opinion, having no grass root level experience, they can never prove to be the visionaries, rather can be expected to contribute more to the debacle of the already doomed economy. The fact cannot be ignored, Banks prefer to give loan to the dishonest big businessmen, but not to the honest deserving common man having the need of small loans to help boost the economy at grass root levels, that ultimately can boost the health of the sick banks. Government policies for the benefit of the common man continue to find place only on paper, but not sincerely implemented practically.

In fact the Boards should be constituted with at least 50% of the incumbents drawn from the open market to handle the business of the PSU banks. The executives, with NIL stake in the PSU banks but with unfettered powers can only be expected to add more and more to the woes to drain out the public money.
DrRajesh Bheda
6 years ago
when was AIBEA helpful in running the banks ? did anytime they report wrong doing in any of the banks. There limited responsibility has been to protect jobs & ask for raises,
Replied to DrRajesh Bheda comment 6 years ago
AIBEA is a body of employees, constituted by and for the welfare of of the employees only, not for the benefit for the banks or their customers. So, nothing about the business can be expected from them other than the affairs in the interest of the associated employees. So, your grudge, if any should not be against any association, but against the wrong policies of the management of the banks.

In fact, any association takes its shape only when the policies of the employers' management are not employee friendly.

According to my personal experience during my service period in different organizations, employees, may be of hard core nature and /or associated with any hard core association and union, do contribute their might if the managements of the organizations are employee friendly. They help their superiors to achieve more and more efficiency with practical results for the unit they belong and also for the organization as a whole. During my service period in one and all of the organizations I serve, I gathered more and more strength and efficiency only due to the employees, who worked under me.

In fact, it is the ego factor of the bosses associated with the incompetent and egoistic HR Departments of the organizations that becomes the sole cause of inefficiency and loss for the organizations.
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