The number of bank branches has grown to 90,000 today, of which 40,000 are in rural and semi-urban areas, which were earlier neglected. The merger will also cut into employment opportunities as the intake of staff will reduce.
"We have seen after the merger in SBI that 7,000 branches were closed down. In this proposed merger, branch closure will be much higher. It will be unwise to reduce the branches in the country when what is required is expansion, not amalgamation," Venkatachalam added.
The merger is a diversion from the economic crisis, he alleged. The real agenda is to help the corporates. Big banks will tend to cater to big corporate customers and ignore the common man. This will defeat the social orientation and objectives of nationalised banks.
"The argument that the merger will make our banks bigger and globally competitive is a mere myth. Even if all our banks are merged into one entity, the capital base would be around $4 billion whereas most global banks operate with capital base of $60-$80 billion," Venkatachalam said.
He added that larger banks come with larger risks as they would give bigger loans. It would also become more difficult to monitor bad loans
and frauds, he said, adding that Punjab National Bank, as a single lender, could not realise that Nirav Modi was cheating it for years. What India needs is strong and people-oriented banks, not necessarily big banks.
AIBEA will oppose the closure of the six banks and will shortly launch agitations and strikes, Venkatachalam asserted.