Even as the government has asked IDBI Bank and United Bank of India (UBI) to prepare a consolidation plan, the Chennai-headquartered All-India Bank Employees Association (AIBEA) has questioned the objective.

On Friday (August 1), AIEBA general secretary CH Venkatachalam said the association will protest the plan to merge the two banks, and any other bank for that matter.

"The government should first initiate a CBI probe against Archana Bhargava (the former UBI chairperson who made an inglorious exit after about 10 months at the helm) who disbursed loans left, right and centre and got away free," he told Governance Now over telephone. 

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Employees usually fear merger due to differential pay scale.

Venkatachalam said mergers take place when a country is overbanked but even though 60 crore people in the country are yet to get a bank account, the government is planning consolidation. “This,” he said, “is beyond any logic. China has 600 public sector banks against India’s 27. In March 2012, we had 68,900 public sector branches, which increased to 74,200 in March 2013 – 5,300 more branches. The private sector had 13,500 branches in March 2012 and expanded to 15,600 in March 2013 – an increase of 2,100.”

He said though public sector banks are reaching out to more people than their private sector counterparts, the government wants to “encourage private sector at the cost of public sector banks by consolidating the public sector banks and then diluting its stake”.

Large public sector banks are already struggling to catch up with private banks on service front, and merging more entities will only make them worse, Venkatachalam contended. There is room for all to do business when half the country is still deprived of banking, according to him.     

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A plan to merge State Bank of Patiala with State Bank of India is also on the anvil. AIBEA will start an agitation to stop "any such move” by the government, Venkatachalam said.