Feb 17, 2017 10:38 AM IST | Source: Moneycontrol.com

SBI merger: Bank unions question need for ‘big bank‘

Nine bank unions, including All India Bank Employees Association and All India Bank Officers‘ Association, have questioned the government and SBI management‘s need for creating a large bank.

SBI merger: Bank unions question need for ‘big bank‘

Beena Parmar
Moneycontrol Bureau

The Union Cabinet on Wednesday paved way for State Bank of India to become a banking powerhouse making it to the top 50 banks globally. But is it important to be big, ask the bank employee unions.

Since it was first proposed in May last year, bank unions have strongly opposed the merger and have done multiple strikes against the proposal.

Under the banner United Forum of Bank Unions (UFBU), nine bank unions including All India Bank Employees Association (AIBEA) and All India Bank Officers’ Association (AIBOA) have questioned the government and SBI management’s need for creating a large bank.

CH Venkatachalam, General Secretary, AIBEA said, “What we need is not big but strong banks. Big banks also mean bigger risks. The SBI associates have been doing quite well in their own geographies, making good operational profits, what was the need for them to be merged?" he asked.

"Bad loan problem is a universal problem. Will merging the banks help recovery of bad loans, will it improve their efficiencies?” Venkatachalam questioned further before replying with a stern "No."

The UFBU gathered about one lakh employees across the country on Thursday to stage rallies and demonstrations opposing the big move yet again.

After the merger, SBI will have additional 70,000 employees making the total headcount to 2.71 lakh.

There is also a difference in the way wages are structured at SBI and the subsidiary banks. The SBI management will need to have a dialogue with the subsidiary banks’ employees and many of them will get a huge lump-sum take home right now, while some may have the option to take it in future, the bank’s senior management had said in the past.

SBI first merged State Bank of Saurashtra with itself in 2008. Two years later, State Bank of Indore was merged with it, which the bank says was done smoothly.

Venkatachalam does not believe in creating “too big to fail” banks.

“Lehman Brothers was too big to fail. We know what happened to it. At present, India needs more rural banking services and big banks cannot do that. Economies of scale cannot be a good reason for a merger. We are not against reforms but the system cannot be monopolised,” he said.

According to him, future recruitments will be stopped as the bank plans to not hire in the posts that will see retiring officers in the next 3-4 years.

“Banking is the only sector creating jobs and the biggest bank will not recruit. It will lead to reduction of jobs up to 2 lakh,” Venkatachalam said.

Since 2013, SBI has been consistently reducing its headcount by about 6000-7000 employees every year. This shows they are recruiting less people than those retiring each year. The SBI Chief had once also said that technology will require the bank to recruit less people.

As on December end 2016, the total staff strength stood at 2,00,820.

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