In August, the government announced a mega plan to merge 10 public sector banks into four with a view to creating fewer and stronger global-sized lenders with robust balance sheets that can be used to boost credit and spur growth.
The government on Tuesday assured the Rajya Sabha that merger of 10 public sector banks will not lead to any job losses and employees’ interest will be protected. In August, the government announced a mega plan to merge 10 public sector banks into four with a view to creating fewer and stronger global-sized lenders with robust balance sheets that can be used to boost credit and spur growth. During the Question Hour, Minister of State for Finance Anurag Singh Thakur said lending and other banking services to eastern states will be improved after two Kolkata-based banks are merged. While United Bank of India (UBI) will be merged with Punjab National Bank, Allahabad Bank will be amalgamated with Indian Bank. These two banks are headquartered in Kolkata.
“Merger of banks will strengthen the lending capacity. It has been ensured that no person loses job. The employees of merging banks will benefit the maximum. Merger is being done keeping their interest in mind,” he said. “We have taken enough precaution,” he said, adding that Narasimham Committee in 1998 and Leeladhar Committee in 2008 recommended amalgamation of the banks. “Amalgamating banks was advised to duly factor in and draw road maps for converging IT systems and HR and to put in place institutional arrangements to ensure expeditious integration,” Thakur said.
After due consideration by their respective boards, the banks have informed that multi-level coordination and integration committees have been set up to ensure faster integration across functionalities, he added. The minister was responding to a query from Trinamool Congress member Manish Gupta who said that about 50,000 employees will be jobless by next year due to the merger. To another query on banking services likely to be affected in eastern states due to the merger, the minister said the reach and lending capacity will be “much larger and better” with the amalgamation.
“In today’s time of competition, I think expansion of these banks is very important…It was our government which went for asset quality review of bank loans given between 2004 and 2014. We adopted an approach for better functioning of the banks and recapitalised them with over Rs 2.35 lakh crore for better strengthening and functioning,” he said. As far as lending to eastern states is concerned, the minister said, “Let me assure the member there would not be any shortage or shortfall of services.” Responding to another query from Trinamool Congress member Manas Ranjan Bhunia on reasons for merger of UBI with PNB, the minister said, “I think the overall intention was to create a strong and competitive bank that may serve as catalyst of growth with improved risk profile of the bank. As far as the interest of the employees are concerned, pay allowances were less favourable overall.”
He said UBI’s total business size is Rs 2,08,000 crore, whereas that of PNB is Rs 11,82,224 crore. With the merger, total business size will be Rs 17,94,526 crore, making it the second largest bank in the country. “What we have kept in mind is the software ‘Core Banking System’ being used by them. All these banks which are using similar kind of software have been merged accordingly so that there would not be any difficulty for the employees,” he said. As far as the sentiment of eastern states or Kolkata is concerned, that will be taken care of, Thakur added.