Merging for strength and diversion?
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Merging for strength and diversion?

August 31, 2019

Finance Minister Nirmala Sitharaman yesterday announced the merger of 10 public sector Banks into four entities.

The first merger, that of Punjab National Bank, Oriental Bank of Commerce and United Bank will create a super-bank named Punjab National Bank. This will be the second-largest public sector Bank in India, after the State Bank of India.

The second merger will be that of Canara Bank and Syndicate Bank — the new Bank will be called Canara Bank.

The third merger is of Union Bank of India, Andhra Bank, Corporation Bank and this new entity will be named Union Bank of India.

Finally, the fourth merger, that of Indian Bank and Allahabad Bank will be named Indian Bank.

Now, while Banks are getting merged we in Karnataka, more so in Dakshina Kannada, have much to feel disappointed about.

Dakshina Kannada, once known as the ‘cradle of Indian banking’ as it gave birth to four major Banks of India — namely Corporation Bank, Canara Bank, Vijaya Bank and Syndicate Bank — after yesterday’s announcement will have only one, Canara Bank. Of course, Karnataka Bank also exists but it’s a private bank.

These public sector Banks carried the good name of Karnataka and brought good name to Kannadigas as they expanded across the country.

Now, this massive merger is said to be put in place to create globally competitive Banks which can serve the needs of a 5-trillion dollar economy which the Government hopes India will be by 2025 !

This move to merge should not come as a surprise, considering that this Government acts on the recommendations of Committees created by the Congress.

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In fact, there are numerous schemes that were introduced by Congress which BJP re-named, re-branded and implemented effectively — like the Pradhan Mantri Jan Dhan Yojana (PMJDY), which was originally introduced as ‘No-Frills Accounts’ for Direct Benefit Transfer by the Congress or the popular Swachh Bharat Abhiyan which was originally introduced by Congress as Nirmal Bharat Abhiyan, or even GST for that matter. Now it’s about merging Banks.

Many may recall, in the 1990s, the then Congress Government had set up Committees to analyse India’s banking sector. It wanted these Committees to recommend ways to make Banks more effective, competitive and efficient. One of the Committees was Narasimham Committee headed by M. Narasimham, the 13th Governor of Reserve Bank of India (RBI). And this Committee had recommended way back then itself that strong Banks must be merged for stability. Congress did not take the advise, now BJP has and it might benefit politically.

But will the Government find the success it hopes for? Even today there is debate whether nationalising Banks by Indira Gandhi in 1969 was a success. Many would say yes — socially, economically and politically.

It is recorded in history that after the election of 1967, Morarji Desai wanted to be the PM, but a compromise was reached and he agreed to be the Finance Minister and Deputy PM while Indira Gandhi was the PM.

Senior Congressmen such as K. Kamaraj, S. Nijalingappa and Morarji Desai, known as ‘the Syndicate’ made life difficult for her. So Indira Gandhi wanted to come out on her own in Congress and become the face of Congress Party so she would not need the support of these senior leaders.


She found an opportunity when President Zakir Hussain died halfway through his tenure. The Syndicate wanted their man Neelam Sanjiva Reddy to be the President. Indira wanted V.V. Giri. Soon, she fired Morarji Desai as Finance Minister citing he was siding with rich industrialists. Then she issued an ordinance announcing that the State had taken over fourteen privately owned Banks. This appeased the poor. 

The nationalisation of Banks was challenged in the Supreme Court and the challenge was upheld, but the judgement was immediately nullified by a fresh ordinance brought in by the Government ! This was signed by the President. And who was the President by then? Indira’s man V.V. Giri. Who was a stand-in President after Hussain’s death?

With this Indira Gandhi became the face of the poor in India and of the Congress Party. It also signalled the dominance of the Gandhi family in both Congress and Indian politics going forward.

In the first six months of nationalisation, 1,000 new Bank branches were opened mostly in rural areas. This became the first significant step towards ‘financial inclusion’ and  has been increasing ever since.

So like in 1969, Indira Gandhi’s reason to nationalise Banks was political, yesterday’s announcement to merge could be to divert attention from the disappointing growth figure of 5%.

And just like how nationalisation of Banks won elections for Indira Gandhi, the same distribution network has contributed to Modi’s victory.

For now, let’s hope the Government achieves what it hopes to, which is a stronger banking system. But just a merger will not do, there needs to be measures to make managements more accountable. There must be transparency while appointing Government Nominees to Bank Boards as these are political appointments. Else, this merger will remain merely a timely diversion from a terrible growth statistic instead of the foundation for 2025.

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3 COMMENTS ON THIS POST To “Merging for strength and diversion?”

  1. syed matheen says:

    I quote “In fact, there are numerous schemes that were introduced by Congress which BJP re-named, re-branded and implemented effectively — like the Pradhan Mantri Jan Dhan Yojana (PMJDY), which was originally introduced as ‘No-Frills Accounts’ for Direct Benefit Transfer by the Congress or the popular Swachh Bharat Abhiyan which was originally introduced by Congress as Nirmal Bharat Abhiyan, or even GST for that matter” unquote
    Then congress had a PM who was world known economist and who served RBI, now we have a chai wala PM who is busy shooting wild movie, talking rubbish on media, fit India, yoga and all. Congress had a maximum cap of 18% on GST, BJP introduced it with 28%, the same BJP who opposed GST once.
    Maruti Suzuki, Honda Cars India, Renault-Nissan and Skoda said their shutdowns are planned. Mahindra in a statement to stock exchanges said its manufacturing unit, Mahindra Vehicle Manufacturers, would observe “no-production days” of between five and 13 days in the first quarter of 2019-2020. This is happening for the first time, India is in deep economic crisis, million of people will lose their job. FMCG is suffering, banking is suffering, Real estate is suffering, Auto mobile is suffering. NEW INDIA is arrived, ACHE DIN arrived and enjoy these moments sitting in home without jobs.

  2. Prabhu says:

    I tend to agree with many parts of your statements , but we have to blame ourselves for electing Modi with such historic majority! I won’t join the idiots brigade to Call it EVM tampering or media manupulation because most of the mainstream media worked agaist Modi! Now he is the elected leader, they should not oppose everything Modi says or does. Congress needs to heed to the voice of reason within congress! Instead, congress is punishing anybody who regpfuses to abuse Modi! They called Modi a Chor, whose life is an open book! Especially, Looters can’t be calling him a Chor!
    The major reason for Modi win both times is the pathetic track record of both UPA governments who were scared of Pakistan, the liberals took the charge and marginalized Hindus majority! Just see how MMS was hell bank on appeasement that he was saying, the first claimants if nation’s resources should be Muslims! He certified repeatedly the moron Rahul as the future PM! Now everybody wonder why Modi Won?
    Now MMS is laying his tounge reading the congress prepared statements in front of Media! Do you think he deserv s respect?
    MMS is a honest person at a personal level. But as an administrator or as a PM or even as a Finance minister was absolutely useless to the nation. His only strong trait is, he Is ever loyal to Sonia Gandhi and her family! Even the most faithful Dogs may use some desecration and may decide on their own, but MMS can’t! That is the secret of his success! No other true Sikh would have been so faithful to a family that massacred over 20,000 of the fellow Sikhs!
    For a decade, his job was to hold the PM post for Rahul against the wishes of more eligible congress candidates for PM position! So, selflessly he facilitated tye congress members to do scams without any hurdle. Congress looted India scams after scam . Last decade itself they looted 300,000 crores! Every single scam below was engineered by Sonia, Rahul and Vdara under the economists like Manmohan Singh and crooked politicians like Chidambaram.
    The list is as follows:
    Bofors scam, a trademark scam of Gandhi family.
    Coal Scam: CAG calculated it to be to the tune of 1.86 Lakhs crores, whoops mind-boggling!
    2G Spectrum Scam: To the tune of 1.76 Lakhs crore!!
    Common Wealth Games scams: To the tune of 70,000 crores, involved parties Suresh Kalmadi, Sheila Dikshit, Robert Vadra amongst others
    Chopper Scam: Perfect example of bribery and corruption in India 610 Million!
    Tatra Truck scam: dirty defence deal
    Adarsh Housing scam: a building made for war widows, but flats occupied by Congress big wigs!
    Cash for vote scam in 2011
    Satyam Scam
    Telgi stamp paper scam
    Insurance Scam
    And the list goes on!
    All these were provide protection by MMS government who suddenly sitting on a moral high ground crying citing a clean and corruption free BJP government.
    So, why is he criticizing Modi government and says he is “worried” about Indian economy while he was not worried when loots were happening? Has he become suddenly patriotic? No, Definitely not ! That ship sailed long ago never to return! His only worry is not about the nation’s economy but about Sonia and her family’s economy! No new opportunity to loot! Fraud cases are haunting! Chidambaram and his son close to prison. VADRA is not too far behind! Rahul is calling Modi a Chor and lost his ancestral seat! That is whip you he started calling vendetta and tax terrorism!
    Some people say he is a good economist and his criticism is as an economist! Let’s examine that too!
    He stopped being an economist long time ago! He took the credit of PVN’s bold moves in opening the economy while he was too scared to implement it! PVN forced him to implement it. When the Indian economy turned around, PVN was humiliated by Sonia and MMS hogged the glory!
    Now he is critical of Modi government for the RBI releasing 1.76 Lakh crores to government! Rahul calls it a loot of the century! RBI a government body giving money to government for improving the economy is called a loot, but 100 times more money was looted by congress in the scams listed above! And MMS also calls tax terrorism! Demanding defrauded tax from businesses is called terrorism?
    MMS must be ashamed that he called cases against fraudsters vendetta politics! Also, they are supporting Pakistan stand on Kashmir to the extent that Pakistani PM is using congress statements to stake their claim on Kashmir!
    Lastly, his viewpoints on present situation of Indian economy is not his own, but Rahul Gandhi’s friends! He was reading from a sheet of paper provided to him. If only India had a better PM even from Congress instead of this puppet PM, we would be in a better place!

  3. Raghu says:

    The entire world economy is slowing down as per world bank numbers, Newyork Times, Washington post, Australian news papers. Chinese media and Europian news papers! So, India being a dependent economy has definitely slowed! I saw for the first time minister addressing the media patiently answer all the questions and explain the governments actions!
    Manmohan singh, the ex PM and an eternal save to Madam Sonia read the Rahul’s take on the economy! Many people say he was a noted economist! wrong! The economist in him hanged himself to death when he swore loyalty to Sonia! He was a gutless wonder who only spoke what Sonia wanted to say and not an extra word! He lacked guts and brought the economy to the verge of collaps! Only PVN took some bold steps! Thanks to Sonia, she insulted PVN and kicked Him out and this loyal 🐕 got all the credi! Even dogs may need to learn something from MMS when it comes to personal loyalty.
    He is the person who pledged gold reserves of RBI to world bank! He increased our debt from 12 Lakh crores to 52 lakh crores over 10 years and let Sonia and her family and friends loot the nation ! Every year there was a mega scam ! Every one was over a lak crore! RBI was even too week that they had to pledge gold reserves! Today, this dog is barking for Sonia as though he served the nation! No, he never served India! He let his masters loot India and provide protection to them! He was a national shame and disgrace as a human being! Even now he is doing the same thing reading out what Sonia has dictated! Now Sonia is scared that her son in law will end up in prison and so they are calling Vendetta! This shameless person who ruled India knows very well it is not vendetta!


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