“One last time I went to the office premises,” said JP Sharma who retired from Syndicate Bank after 38 years of service. A rather dispassionate tone didn’t hide the apparent sadness in his heart. “I knew there won’t be a Syndicate Bank as we know it after a few days. Quite a strange feeling, no?” Sharma, based in Delhi, said.
The retired banker joined Syndicate Bank at the age of 21 and worked for nearly four decades. “Syndicate Bank has been a household name for generations. It is hard to believe that this bank won’t have an identity anymore,” Sharma said.
As six Indian public sector banks (PSBs), some of which have been in existence for over a century, ceased to exist on April 1 after their amalgamation with bigger PSBs, old-timers are looking back at the halcyon days of these institutions wistfully. This is probably for the first time in the history of Indian banking that half a dozen banks have met their end on the same day.
There are mixed emotions running in their minds. The organisations that have been part of their lives are no more. “In those days, there were no ATM cards and digital banking. There were no computers too till late 80s. Every work was manual. But with customers we had a relation like that of family friends,” said Sharma. Banking was a routine service only for those who really needed it. Most of the transactions used to happen in cash.
Now, there are uncertainties on future of staffs and loyal customers, even though the government has assured them that no employees will be handed over the pink slips. “Each of these banks have a past. These banks have grown with people,” said CH Venkatachalam, Secretary of All India Bank Employees Association.
Mega amalgamation is a move that was announced by Union Finance Minister Nirmala Sitharaman last year. Besides Syndicate Bank, Allahabad Bank, Corporation Bank, United Bank of India, Oriental Bank of Commerce and Andhra Bank too were merged on April 1. According to this plan, Punjab National Bank (PNB) absorbed Oriental Bank of Commerce and United Bank, creating the second-largest bank after State Bank of India (SBI). Similarly, Syndicate Bank merged with Canara Bank, and Union Bank of India absorbed both Andhra Bank and Corporation Bank. Also, Indian Bank took over Allahabad Bank.
The Narendra Modi-government hopes that these mergers will bring size and scale to the Indian banking sector. But, there are questions on whether these goals will be achieved in reality. Right now, Indian banks are neck-deep in non-performing assets (NPAs). Total gross NPAs have grown close to Rs 9 lakh crore and analysts expect more pain to come on account of a slowed economy and COVID-19 economic fall-out.
Also, without deep governance reforms in these banks, merely merging these entities could be a futile exercise. Even as the doubts remain, the mergers are finally real. Customers have been moved to the anchor banks. Even after merger, the anchor banks will have logos of the merging banks displayed at the branches along with that of anchor bank.
Nonetheless, each of these PSU banks is steeped in a long, fascinating past. For example, Syndicate Bank was set up way back in 1925 at Udupi by locals in coastal Karnataka with a capital of Rs 8,000 to serve the local community with small credit needs. “There used to be door-to-door collectors who knew each and every customer. Many of these customers have banked with Syndicate for a long time. That is the kind of relation we had with customers,” said Sharma.
The oldest in the lot is Allahabad Bank which was set up in 1865 by foreigners. The idea was to serve local businesses. At that point, the concept of organised markets and businesses borrowing from banks were still in the initial phase.
Later, in 1969, the bank was nationalised. “I joined the bank at the age of 18. Got this job after my father died while serving in the bank. I had just finished my higher secondary course. It’s been 36 years since then,” said Deepak Sharma, who still works as single window operator in the Parliament Street branch of erstwhile Allahabad Bank (now Indian Bank) in New Delhi.
While working in the bank, Sharma completed his graduation. He has no regrets. “It is very sad,” continued Sharma. “There are so many memories. After my father’s death, when this job was offered to me, it was also opening a new chapter of life for my family. Never will we forget the organisation. Never this name will cease to exist in our minds,” Sharma said.
Allahabad Bank has a strong base in the Eastern region along with Uco Bank and United Bank of India. Eastern India was traditionally under-banked compared with south and western India.
Since the industry presence in the East was very limited, these banks have been mostly catering to small businesses and tea estate businesses in the region. Retail banking was very less. With Allahabad Bank being merged with Indian Bank after 155 years of its inception, there is uncertainty and concern among employees about the difference in work culture and synergy.
In the old days, Sharma recalls, the work culture of these PSU banks was also different from today. Absent was the aggressive campaigning of today to get customers.
Banking was a luxury that the poor couldn’t afford and the middle-class could aspire. But, in the last one century, banking services have reached the doorstep of almost every Indian. And further to their mobile phones and computer screens.
The history of state-run banks in India isn’t complete without the role employee trade unions have played in these banks highlighting the human resource issues and pressing demands for employee welfare. Although their presence has weakened a bit compared with the old era, trade unions continue to be a prominent force in PSBs even now. They have a say in deciding the wages for public sector bank employees, work timings and employee benefits.
With the mega merger of ten PSBs into four, there are 12 PSBs in India now, which together control about 60 percent of the assets in the banking sector. PSBs continue to dominate the Indian banking industry in terms of customer reach and asset size. But these banks are still at the mercy of the government for survival capital every year. Questions on the promise of privatisation and implementation of PJ Nayak panel recommendations remain. After the mega-amalgamation, India will have a least five to six banks that can be called large and can intensify the competition for private, foreign rivals.
A new era in banking has begun.