Bank Mergers and the Opposition of the Workers

Bank workers face the threat of massive job losses
They also know that mergers are a stepping stone to privatisation

On 1 April 2020, ten state-owned banks were turned into four giant sized banks through mergers. The proposal for these mergers was announced in August 2019.  It met with widespread opposition by bank workers’ unions.  The central Cabinet approved the merger plan on 4 March 2020 and implemented it in the midst of the lockdown. (See Box 1)

The process of raising the scale of banking operations by creating bigger banks began in 2017, when the State Bank of India took over five of its associate banks and Bharatiya Mahila Bank. In 2019, Vijaya Bank and Dena Bank were merged with Bank of Baroda. The number of state-owned banks has been brought down from 27 in 2017 to 12 in 2020, headed by seven giant sized banks. (See Box 2).

Bank workers know from their past experience that mergers will be followed by the closure of many bank branches and loss of thousands of jobs. In 2017-18, as many as 3400 bank branches were closed all over the country. It was the highest number of closures in any one year. Out of these 3400 closures, over 2500 branches were closed after five smaller banks were merged with the State Bank of India on 1 April, 2017. Following that merger, SBI laid off more than 10,000 employees within six months, and another 12,000 over the next 18 months.

The All-India Bank Employees’ Association believes that a minimum of 7000 branches would be closed after the merger of banks on 1 Apr 2020. It predicts that 4000-5000 workers may be either asked to leave or relocated to different locations, so as to compel them to accept the Voluntary Retirement Scheme (VRS).

Bank workers have been united in their opposition to the policy of successive governments to promote the growth of private banks and pressurise state-owned banks to become as profitable as private ones. This has meant closing down “unprofitable” branches, laying off workers and increasing the workload of those who remain employed.  All such measures are taken in the name of cutting costs, maximising profits and competing with private banks. 

Bank workers’ unions have repeatedly pointed out that state-owned banks shoulder many social responsibilities, such as lending to farmers and small-scale enterprises and opening bank accounts for poor people. It is therefore unjust and illogical to compare their profitability with private banks which do not have the same social obligations.   

Explaining the details of the “20 lakh crore economic revival package” announced by the Prime Minister in March, the Finance Minister had said that not more than four public sector companies will be allowed in any strategic sector.  In other words, the plan is to reduce the number of state-owned banks further, from 12 to just four giant-sized banks.  It means more mergers, or privatisation of some of these banks, or a combination of both.  There are already newspaper reports that state-owned banks which have not been merged are going to be privatised, confirming the suspicion of workers’ unions that mergers are a stepping stone to privatisation.

The biggest problem plaguing state-owned banks in our country is that of “non-performing assets”, meaning loans which have not been repaid on time by capitalist borrowers. Bank workers have been repeatedly demanding strict action against capitalist loan defaulters to recover the money they have borrowed.  Far from taking such action, the central authorities have refused to even reveal the names of the biggest capitalist defaulters. 

More than 4 lakh crores of rupees has been spent from the central government budget to make state-owned banks waive loans owed by capitalist companies. The fact that such an enormous amount of public money has been spent to bail out private companies shows that the so-called public sector banks are not at all oriented to serve the public. State-owned banks are being run in the collective interests of big capitalists.   

Workers are demanding that banking should be oriented to fulfil the needs of all, and not to fulfil the greed of a minority of super-rich capitalists.  They are opposing bank mergers, not only because it destroys jobs but also because it is a stepping stone to privatisation and direct control of banking by profit hungry monopoly capitalists.  Their struggle deserves to be supported by all those who care about the future of our society and the wellbeing of the toiling majority of people.

Box 1
Bank Mergers on 1 April 2020
1. Oriental Bank of Commerce (OBC) and United Bank of India (UBI) have been merged into Punjab National Bank (PNB). After merger, PNB becomes the second-largest state-owned bank, with a business of Rs 17.95 lakh crore and 11,437 branches, before some of them are closed.
2. Syndicate Bank has been merged into Canara Bank, creating the fourth-largest state-owned bank, with Rs 15.20 lakh crore business and 10,324 branches.
3. Andhra Bank and Corporation Bank have been merged into Union Bank of India, which becomes the fifth-largest, with Rs 14.59 lakh crore business and 9,609 branches.
4. Allahabad Bank has been merged into Indian Bank, creating the seventh-largest, with Rs 8.08 lakh crore business.
Box 2
Seven Biggest State-Owned Banks after mergers
1.    State Bank of India
2.    Punjab National Bank
3.    Bank of Baroda
4.    Canara Bank
5.    Union Bank of India
6.    Bank of India
7.    Indian Bank