Center advice SBI to have talks with bank unions on consolidation proposal

Last month the boards of SBI and the State Bank of Indore had passed resolutions approving the consolidation proposal. But the Center has directed the SBI not to follow the Reserve Bank of India the issue of acquirement of State Bank of Indore.

Now the Government has asked the SBI management to have talks with bank unions and try to convince them about the merits of the consolidation proposal.

Earlier SBI had approached the RBI and the Government for their approval of this transaction. An RBI may take some time to give approval because it seems that the central bank has some uncertainties over the method in which the SBI operations was carried out.

However the unions of all the six associate banks had called for protest strike on July 6 with regard to approval of consolidation proposal by boards of SBI and the State Bank of Indore.

The advice for meeting between the unions and the SBI management was given by the Deputy Chief Labour Commissioner, Mr N. K. Prasad, at a conciliatory meeting with the representatives of six bank unions, SBI management and senior management of all six associate banks of SBI.

Mr C. H. Venkatachalam, General Secretary, All India Bank Employees Association (AIBEA), told Business Line, “Since the SBI management has now agreed to discuss the State Bank of Indore merger proposal with the bank unions, we have decided to defer the strike call given for July 6 in all six associate banks”.

A number of bank unions are against the consolidation proposal, as the SBI senior management had not taken the employees into confidence before taking the decision on the consolidation.

For now, at the meeting the senior management of the other five associate banks — State Bank of Mysore, State Bank of Hyderabad, State Bank of Bikaner and Jaipur, State Bank of Patiala and State Bank of Travancore — had clearly informed that they had no proposal for merger with SBI.

The proposed acquiring of State Bank of Indore by SBI will be the first consolidation deal in the banking industry after the Finance Minister, Mr Pranab Mukherjee, last month had emphasized that public sector banks must look at consolidation as a serious option. He had said that consolidation is important in order to reduce risk to financial stability and also to face competition.

The Finance Minister had also clarified that the proposal for consolidation in the banking sector had come from the management themselves and that the Government will only play a supportive role as a common shareholder.