Stop merger of public sector banks: CPI-M

New Delhi, Jan 15 (IANS) The CPI-M on Tuesday urged the government to stop the merger of three nationalized banks, saying it will weaken all three post unification.

The CPI-M said it was "deeply concerned at the un-seemly haste with which the government has been going ahead with the merger/amalgamation process of Vijaya Bank, Bank of Baroda and Dena Bank" ignoring the opposition of the employees and officers.

"The merger of banks is being justified by the government on ground of strengthening and consolidating the concerned banks; but in reality, such a merger will further weaken all the three banks post merger," the Communist Party of India-Marxist said.

"Problems of public sector banks emanate from the deliberate default in loan-repayment by the big corporate houses. The solution lies in stern action by the government for outright recovery of the huge loan amounts from these defaulter corporates with penalty instead of the futile exercise on merger."

But the CPI-M said that the government had been displaying "a totally indulgent attitude" to the defaulter corporates and through the Insolvency and Bankruptcy Code (IBC) procedure public sector banks were being forced to accept big reduction of the defaulted loan amounts.

"Such merger of banks, instead of addressing their basic problems, will actually result in squeezing the banks' operational areas through inevitable closure of several branches seriously affecting employment," it said.

"It also affects the spread and availability of banking services for common people particularly in comparatively remote areas," it added, calling upon the government to desist from such moves.