Bank Mergers: Will it lead to job cuts in future?
New Delhi, Aug 30: Finance Minister Nirmala Sitharaman on Friday clarified that no bank employee will lose his/her job as a result of the bank mergers announced today.
The government will ensure that no bank employee is hurt by the decisions, Finance Secretary Rajeev Kumar said at the briefing.
He added that no one lost their job when the government helped facilitate a merger of Dena Bank and Vijaya Bank with Bank of Baroda last year, creating the third-largest bank by loans in the country.
Historically, mergers tend to contain job losses. Most of this is attributable to redundant operations and efforts to boost efficiency.
In the biggest consolidation exercise in the banking space, the government on Friday announced four major mergers of public sector banks, bringing down their total number to 12 from 27 in 2017, a move aimed at making state-owned lenders global sized banks.
United Bank of India and Oriental Bank of Commerce will be merged with Punjab National Bank, making the proposed entity the second largest public sector bank (PSB).
Making the announcements, Finance Minister Nirmala Sitharaman said Syndicate Bank will be merged with Canara Bank, while Allahabad Bank will be amalgamated with Indian Bank.
Similarly, Andhra Bank and Corporation Bank will be consolidated with Union Bank of India.
In place of fragmented lending capacity with 27 PSBs in 2017, now there will be only 12 state-run banks post consolidation, Sitharaman said.
The finance minister also said banks will be provided adequate capital.