AIBOC CIRCULAR NO. 32 DATED 28.03.2011

AIBOC issued its circular No. 32 dated 28.03.2011 on consolidation of Public Sector Banks. We are reproducing the same here for our readers.

CIRCULAR NO.32                                                   DATE: 28.03.2011

TO ALL AFFILIATES /MEMBERS:

CONSOLIDATION OF PUBLIC SECTOR BANKS

Once again, we have taken up the issue with the Finance Ministry resisting their ill-advised move of consolidation of Public Sector Banks and we have requested to put off their move. A copy of our communication is annexed.

With greetings,

Sd/-

(G.D. NADAF)

GENERAL SECRETARY

No.1454/177/11                                                    Date:28.03.2011

Sri. Pranab Kumar Mukherjee,

Hon’ble Minister for Finance,

Government of India,

New Delhi:

Respected Sir,

CONSOLIDATION OF PUBLIC SECTOR BANKS.

We draw your kind attention to your budget speech and also the news paper reports, wherein it is reported that, the long standing proposal for consolidation of Public Sector Banks is back on the agenda of the Government. It is also reported that, the Finance Ministry is likely to appoint a Committee- comprising the Officials from the Finance Ministry, Reserve Bank of India and some Bankers, to look into the merits of consolidation of the “Public Sector Banks” and recommend a plan of action to identify the Banks to take the process forward.

We would like to bring to your kind notice the fact that, the consolidation process was kept on hold, as Banks who were expected to come up with inter  merger proposals and probable partners, did not comply with required terms. We had launched a strong resistance against the move on the ground that, the consolidation process which may usher in big Banks will not be in the best interest of the country, as each individual Bank has its own social, cultural background with spread in a particular geographical area. They are catering to the customers of a particular geographical zone,  and with merger this identity will be lost. Besides, the above managerial merger will be difficult to achieve.

With the global economic melt down, leading to collapse of Banking giants in USA, Europe, Japan, like house of cards, shattering the notion that “Big is Beautiful”. Due to stiff opposition to merger move and also the stringent regulatory mechanism of RBI, the Banking Industry in our country, especially the “Public Sector Banks”, were saved from the jaws of the global financial crisis. Our Banks were insulated from one of the worst crisis faced by the Financial Institutions all over the globe.

Keeping the foregoing in view, the Government had kept the move on the back burner and you have made loud announcement that, Public Sector Banks will continue to be under the Government control. Now by reviving   the move to consolidate the Public Sector Banks, there is an attempt to ignore the past upheavals in the financial sector all over the world. The proposed move, will certainly expose the well run Public Sector  Banks  to the hazards, faced by the big banks in the USA, Europe and Japan etc. Hence, we are against the move of the Government embarking upon consolidation of Public Sector Banks.

Sir, it is time to strengthen the Public Sector Banks which have been playing a pivotal role in the economic growth of the country, financial inclusion, poverty alleviation programmes of the Government, employment generation programmes etc. with passion.

We have the confidence that, the move will be put on hold and encourage the Public Sector Banks to be on the growth trajectory, through competition amongst them for full financial inclusion in the Country.

Thanking you,

Yours faithfully

Sd/-

(G.D. NADAF)

GENERAL SECRETARY