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Monday, August 07, 2006

Bank officers to oppose merger proposal

The All India Bank Officers’ Confederation joint-general secretary T R Bhat on Sunday said that organisation will oppose the proposed merger of public sector banks and warned that move could lead to serious implications on the national economy.

While statements are repeatedly being made by Finance Minster about merger of PSBs to form four-five large banks, the Prime Minister Manmohan Singh has also blessed the suggestion, Bhat said addressing reporters here. He said there is no consensus that mergers can improve the efficiency of banks.

On the other hand, when entities get merged, instead of competition there will be oligopolistic tendencies that could result in price manipulations, he said.

Bhat observed that the Government wants public sector banks to compete with largest banks in the world by the merger process.

However, it is a fact that even after merger all the 27 PSUs will have hardly one tenth of the capital held by City Bank, considered to be the largest in the world in terms of capital.

The confederation secretary said that the every bank has its on business culture, which keeps it distinct from others. Mergers can cause serious cultural conflicts, he said.

He said the ability to face competition depends on the speed of service rendered by the bank, the quality and efficiency in delivery of service will matter and its not the size.

On the issue of pension, he said at present only 50 percent of the bank employees are covered under pension schemes. The confederation has placed a demand before the Indian Banks’ Association to cover all the employees under the schemes, he said.

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