Mamata Banerjee writes to PM Modi against merger of banks

West Bengal Chief Minister Mamata Banerjee. (Photo: IANS)


Chief minister Mamata Banerjee, wrote to Prime Minister Narendra Modi, protesting against the Centre’s unilateral decision to merge two national banks headquartered in Kolkata, without consulting the state government. She requested Mr Modi to rethink and roll back the decision.

According to Banerjee, the merger of United Bank of India (UBI) with Punjab National Bank (PNB), and Allahabad Bank with Indian Bank will “affect the developmental momentum” of the state. She also raised her concern over the future of thousands of employees of the two banks. The All India Bank Officers Confederation has also written to Banerjee about their concern.

“I’m deeply concerned to learn that two public sector banks headquartered in Kolkata are being merged with banks headquartered in Delhi and Chennai respectively without any consultation with the state government or with the management of these two banks,” she wrote, adding that in a federal structure it is imperative to consult the state governments and political parties before taking such a decision.

Allahabad Bank was set up in 1865 in Kolkata, and has 562 branches, while UBI was set up in 1914 in the city and has 875 branches. “With the surprising merger, the large number of branches in Bengal will be put at risk. My apprehension arises from the fact that all direct benefit schemes and social and economic development expenditure go to the beneficiaries at the grassroot level through the banking system in our state. The unilateral decision of merger of banks and threat of shifting headquarters from Bengal will adversely affect the developmental momentum of the state,” wrote the chief minister.

During SBI’s merger with associated banks, 1500 branches were closed across the country of which 80 were in Bengal. “My legitimate fear is of Bengal facing branch closures and thereby cutting off of banking services to our people,” she wrote.

Raising concern over the future of 6598 employees of UBI and 4201 of Allahabad Bank, Banerjee apprehended that their “jobs will be put at risk”. “My fear arises from the fact that out of 80,000 employees of the associated banks merged with SBI, 3500 employees had no option but to take voluntary retirement… I am also afraid that the headquarters of UBI and Allahabad Bank may be shifted to Delhi (PNB) and Chennai (Indian Bank). This will be a serious blow to the employees and banking activities of UBI and Allahabad Bank,” she wrote.

She further took up the issue of the downgrading of UCO Bank, which is headquartered in Bengal, from a National Bank to a Regional Bank, and said that it “indicates some hidden agenda to deprive Bengal’s banking sector”.

Quoting a recent report by Credit Suisse, she said it has “ominously opined that the merger of 10 public sector banks into four entities is unlikely to revive credit growth or have meaningful cost synergies”

“It appears that this move was made primarily to lower Central government’s burden of capital infusion into the public sector banks, already reeling under liquidity crunch. Our previous experience of merger of SBI and associated banks shows that the bad loan problem has worsened thereby resulting in lowering of profits and impeding credit growth,” her letter read.

Banerjee requested Modi to reconsider the matter as a “hasty decision” can “result in insurmountable difficulties to people”. “I would therefore strongly urge you not to merge UBI with PNB, and Allahabad Bank with Indian Bank and thereby also raise the spectre of moving the headquarters of these two leading banks out of Kolkata. Kindly do not deprive Bengal like this,” her letter read.