The Centre has advised the State Bank of India not to pursue with the Reserve Bank of India the issue of acquisition of State Bank of Indore.
Instead, the Government has now asked the SBI management to invite bank unions for talks and persuade them about the merits of the consolidation proposal.
SBI had already approached the RBI and the Government for their approval of this transaction. An RBI nod may take some time, with the central bank apparently having some reservations over the manner in which the SBI operations was conducted.
The boards of SBI and the State Bank of Indore had last month passed resolutions approving the consolidation proposal, provoking a protest strike call for July 6 by the unions in all the six associate banks. But, now, the SBI management has been asked to enter into discussions with the unions.
This advice 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.
“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,” Mr C. H. Venkatachalam, General Secretary, All India Bank Employees Association (AIBEA), told Business Line.
A number of bank unions are opposed to the consolidation proposal, as the SBI senior management had not taken the employees into confidence before going ahead with the resolution on the consolidation.
Meanwhile, at the meeting today, 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 — made it clear that they had no proposal for merger with SBI.
The proposed acquisition of State Bank of Indore by SBI would be the first consolidation deal in the banking industry after the Finance Minister, Mr Pranab Mukherjee, last month emphasised that public sector banks should look at consolidation as a serious option. He had said that consolidation was important to reduce risk to financial stability and also to face competition.
The Finance Minister had also made it clear that the initiatives for consolidation in the banking sector had to come from the management themselves and that the Government would only play a supportive role as a common shareholder.
Source: The Hindu Businessline