New Delhi: Two big unions in the banking sector are set to go on a strike from March 27 in order to protest against the merger of 10 banks to form four mega banks. The Union Cabinet, chaired by Prime Minister Narendra Modi, approved the consolidation of public sector banks on March 4.
The news comes just days after PSU Watch reported that bank unions had deferred a three-day strike which was scheduled to begin from March 11. The strike call was withdrawn after the IBA (Indian Banks’ Association) agreed to hike wage revision from 12.5 percent to 15 percent.
Merger of 10 banks approved
The Cabinet approved the merger of Oriental Bank of Commerce and United Bank of India into Punjab National Bank, Syndicate Bank into Canara Bank, Andhra Bank and Corporation Bank into Union Bank of India and Allahabad Bank into Indian Bank.
The amalgamation would be effective from April 1 and would result in the creation of seven large PSBs with scale and national reach, with each amalgamated entity having a business of over Rs 8 lakh crore. The mega merger would help create banks with scale comparable to global banks and capable of competing effectively in India and globally. Greater scale and synergy through consolidation would lead to cost benefits which should enable the PSBs enhance their competitiveness and positively impact the Indian banking system, an official statement said.
PSBs will gain competitive advantage through merger: Govt
In addition, consolidation would also provide an impetus to amalgamated entities by increasing their ability to support larger ticket-size lending and have competitive operations by virtue of greater financial capacity. The adoption of best practices across amalgamating entities would enable the banks improve their cost efficiency and risk management, and also boost the goal of financial inclusion through wider reach.
Further, with the adoption of technologies across the amalgamating banks, access to a wider talent pool, and a larger database, PSBs would be in a position to gain competitive advantage by leveraging analytics in a rapidly digitalising banking landscape, said the release.
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