With the announcement of merger of three state-owned banks, employees of banks are scared about its impact as consolidation generally set in motion the restructuring process. Employees fear it could also lead to job cuts, particularly at the junior level, with rationalisation of operations in the merged entity.
Vijaya Bank, Dena Bank and Bank of Baroda are now going to amalgamate in order to consolidate stressed financial assets.
Employees at the Dena Bank confirmed that employees are worried as similar mergers in the past resulted in job loss of bank employees.
Dispelling fears that the merger might prove harmful to the employees of the banks and the shareholders, Principal Economic Advisor to the Ministry of Finance, Sanjeev Sanyal told ANI, “There should not be a loss of any kind. The shareholder or the account holder will not be able to make any difference. The delivery of the system will be much better, which will come with synergies, becoming a platform, and everyone will benefit from it. This has been done only to increase viability.”
Finance Minister Arun Jaitley, however, assured on Monday during the press conference, “No employee will face any service conditions which are adverse in nature. The best of the service conditions will apply to all of them.”
There are also fears that the merger may lead to transfer of bank accounts as customers will fear disruption of their services.
Sanyal said, “The merger has been done on a commercial basis. After a research, we felt that the merger of these three banks would increase their commercial viability. There are more than 20 PSU banks now. The talk of consolidation was going on for a long time. The merger of these three banks will create a somewhat bigger entity which will be more successful commercially.”
CH Venkatachalam, the trade union general secretary told PTI, “Firstly, there is no evidence that merger of banks would strengthen the banks or make it more efficient.” He said no miracle happened after the merger of five associate banks with SBI.
“On the other hand, it has resulted in closure of branches, increase in bad loans, a reduction of staff and a reduction in business. For the first time in 200 years, SBI has gone into loss,” Venkatachalam said.
Earlier, RBI was asked to to prepare a list of banks for merger among 21 government-controlled lenders in order to reduce the financial stress on the banking system which is suffering with bad assets.