Tag: AIBOA

The four officers’ unions in the banking sector have cautioned the government that any step towards privatisation, dilution of government equity and/or further mergers and amalgamations of Public Sector Banks (PSBs) would face stiff resistance.

The resistance would not only be from the four unions but also from all the major stakeholders, according to a letter written by unions to the Finance Minister.

The four officers’ unions are — the All India Bank Officers’ Confederation (AIBOC), the All India Bank Officers’ Association (AIBOA), the Indian National Bank Officers’ Congress (INBOC) and the National Organization of Bank Officers (NOBO).

The unions said“We consider that any proposal for privatisation of PSBs is retrograde, ill-conceived and thoroughly inimical to the national interest…It is as clear as daylight that the only beneficiaries of PSB privatisation would be those entities who still owe the state-owned banks thousands of crores in corporate debt.

“We urge upon your good office to kindly rescind any such privatisation proposal, if on the anvil, not only for the PSBs but for all the PSUs (public sector undertakings)”

The Union Government should rather initiate policy discussion on the ways and means of reforming and strengthening the PSBs, they added.

Privatisation of 8 PSBs?

The unions noted that even after the wave of mergers in PSBs undertaken by the Government, the number of PSBs stands currently at 12. These PSBs own around 60 per cent of the total banking assets in the country and account for 64 per cent of all bank deposits and 60 per cent of total loans and advances.

They observed that if the proposed privatisation policy is to be implemented, it would amount to privatisation of at least 8 PSBs, which will put an end to the market dominance of the PSBs.

The Unions referred to last year’s government the announcement, identifying “strategic sectors” where the number of PSUs would be brought down between one and four. Banking along with insurance, steel, fertiliser, petroleum, coal and minerals etc. figure in the list of 18 strategic sectors.

The unions underscored that the dominance of PSBs insulated the Indian economy from the worst consequences of the 2008-09 financial crisis. Further, crucial schemes of financial inclusion like the Jan Dhan Yojana and MUDRA have been implemented by the PSBs much more rigorously than the other segments of the banking industry.

The unions stated that despite the sordid saga of humongous bad-debt accumulation in the recent past, owing to big-ticket corporate debt-defaults, massive haircuts through the debt-recovery channel under the IBC (Insolvency & Bankruptcy Code) and burgeoning NPA (non-performing asset) write-offs, the PSBs have registered positive operating profits year after year, which stand testimony to the hard work and efficiency of the officers and employees of the PSBs.

“In this backdrop and at a time when the national economy is still reeling under the impact of a severe recession caused by the Covid-19 pandemic, we cannot fathom why the Union Government is keen on privatisation of PSUs in general and the PSBs in particular,” according to the letter.

The unions said it was the PSBs, Regional Rural banks and old generation private banks have successfully implemented all the schemes of the government to provide the much-needed fiscal stimulus during Covid times.

They stressed that the development of infrastructure can only be attributed to the contribution of PSBs in the absence of any major DFIs (Development Financial Institutions.

“While private sector banks like the Yes Bank, and earlier the Global Trust Bank, NBFCs like IL&FS and DHFL, co-operative banks like Punjab and Maharashtra Cooperative Bank (PMC) etc. have witnessed failures in the recent times, the PSBs have continued to ensure financial stability and security for the depositors.

“Experience tells us that strengthening the PSBs is the way forward for building an efficient, robust and stable financial sector in India,” the Unions said.