The proposed merger of the State Bank of India (SBI) with its associate banks is the government’s ploy to divert attention from the massive scale of corporate bad loans, said an official of All India Bank Employees’ Association (AIBEA).
“The central government is trying to divert the nation’s attention from the Himalayan scale of bad loans given by the nationalised banks, including SBI, instead of focusing on recovering these and punishing the culprits,” C.H. Venkatachalam, General Secretary of AIBEA, told IANS.
The union cabinet on Wednesday approved the merger of the SBI with its five associate banks — State Bank of Bikaner and Jaipur (SBBJ), Sate Bank of Travancore, (SBT), State Bank of Patiala (SBP), State Bank of Mysore (SBM) and State Bank of Hyderabad (SBH) — as well as Bharatiya Mahila Bank.
Venkatachalam said the SBI itself has bad loans of about Rs 100,000 crore and it should be focusing its energies on recovering these and increasing its business.
The merger is also not good for business as many big accounts in associate banks might shift to other smaller banks instead of remaining with the merged entity, he said.
“The associate banks have a peculiar and strong geographical flavour. Many deposit and loan accounts with them exist because of their local flavour, small size and agility,” Venkatachalam said.
About 10-20 per cent of the business of the associate banks might shift to other public sector banks like Canara Bank in Karnataka or Andhra Bank in Andhra Pradesh and others, he said.
A banking sector expert agreed with Venkatachalam, saying some business of the associate banks will move to other banks post merger.
“A big client of an associate bank branch will become just one more customer for the SBI, post merger. So, the customers will lose the personal touch that they enjoy now with the branch officials,” Venkatachalam added.