The Indian government’s plan to merge nine public sector banks into three large banks, namely State Bank of India, Punjab National Bank, and Canara Bank, has sparked concern among customers and employees. The move, aimed at enabling these banks to compete with foreign banks, is expected to begin by the end of the next financial year. However, this merger could have far-reaching consequences, including making banking inaccessible to common people, increasing workload, and worsening bank environments.
Bank mergers are not new in India, with several state banks having merged with SBI in the past. Recently, Andhra Bank and Corporation Bank merged with Union Bank, while Dena and Vijaya Banks merged with Bank of Baroda. The real objective behind these mergers was to shift the liability of banks in debt from giving loans to billionaires. Apart from mergers, the privatization of banks is also underway, with IDBI Bank being privatized and Yes Bank being taken over by Japan’s Sumitomo Mitsui Banking Corporation.
The central government’s move to privatize and merge public sector banks has been criticized for forgetting the role that these banks played in keeping the country safe during the global financial crisis. Big banks have no interest in ordinary, rural, and farmer accounts, and have recently imposed minimum balance requirements, making it difficult for ordinary people to access banking services. This could lead to a shift from mass banking to class banking, where only the wealthy have access to banking services.
The merger is expected to lead to widespread closure of branches, voluntary retirement, and compulsory retirement, which will adversely affect services. Customers will be forced to accept unilaterally imposed service charges and penalties. The banking sector is heading from nationalization to privatization and eventually to foreignization, which will have adverse effects on the economy and common people. The government’s move has been criticized for being anti-poor, as it will only benefit the wealthy and large corporations.
The privatization of banks will also lead to a loss of benefits that society achieved through nationalization of banks. Small borrowers are being tied up with laws like SARFAESI, while corporate loans worth crores continue to be written off. The decline in the number of banks will also adversely affect services, and customers will be forced to accept poor services and high charges. The government’s move has been criticized for being a shift from pro-people policies to pro-corporate policies, which will have far-reaching consequences for the economy and common people.