Left parties criticise Centre's decision to merge public sector banks

They alleged the decision is a deliberate attempt to divert attention from the real issues facing the country's economy which is "in shambles".

Union Finance Minister Nirmala Sitharaman on Friday announced the merger of 10 public sector banks into four entities with a view to create fewer and stronger global-sized lenders with robust balance sheets that can be used to boost credit and spur growth.

The announcement came shortly before government data showed that growth in Asia's third largest economy slumped to an over six-year low of 5 per cent in the April-June quarter of 2019-20.

"This decision is totally unwarranted and announced at an inappropriate time. When the country's economy is in shambles, banks have a very important role to play in boosting the economy. This is the top priority today," the Communist Party of India (CPI) said in a statement.

"But unfortunately, the whole attention is now being diverted from revival of the economy to merger of banks. This is a deliberate attempt to shift (attention) from real issues facing the economy," it said.

Alleging that corporates are cheating the banks, the CPI said the lenders face a major challenge of recovering the huge bad loans.

"The proposed move to merge banks will shift the attention of the banks to issues connected with merger and bad loan recovery will take a back seat," it said.

The party said merging banks will mean closure of branches and taking banking services away from the common people.

"In the previous merger of banks with SBI, we have seen that 7,000 branches were closed down. Same will happen now also," it said.

Contending that India did not need big banks, the CPI said globally big banks have been found to be very risky.

"We need our public sector banks to effectively serve the people and we do not need such big banks which will only help the big corporates," it said.

"Hence merger of banks is unwarranted and is not in our country's interest. Government should reconsider its decision. The CPI extends its support to the agitation of the bank employees and their unions," it added.

The Communist Party of India (Marxist) echoed similar sentiments.

"The merger will lead to the shrinkage of the network of branches, denying accessibility, particularly in rural India," it said.

"It is reported that the merger of Dena Bank and Vijaya Bank with Bank of Baroda will result in the closure of 800 branches," it added.

Contrary to the concept of universal financial inclusion, this will lead to further exclusion of crores of Indians, the CPI(M) said.

"India is already one of the most unbanked countries in the world. This move will further push the small savings in rural India into the clutches of sleazy chit fund operators and financial mercenaries," it said.

Weakening of public sector banking is meant to facilitate the privatisation of the nationalised banking sector, it claimed.