Finance Minister P Chidambaram is determined to push through consolidation in the Indian banking industry.
"We will go ahead with the consolidation plan and the question on backtracking does not arise. We have discussed this with the Left and, in fact, given them a paper on this. We will finalise the plan once the left parties get back to us with their views on the paper," Chidambaram told Business Standard in an exclusive interview.
He also said there would be no job loss as a fallout of the consolidation drive. This is significant, as trade unions have been opposing mergers in the banking sector, fearing job losses. "Bank-level unions have agreed to consolidation through mergers. Now they need to convince their central bodies," Chidambaram said.
Trade union representatives of the Kolkata-based Allahabad Bank, who had met Chidambaram last week, had reportedly told him that they would agree to bank mergers as a means of consolidation in the industry.
Chidambaram did not talk about any specific merger but said banks were ready for consolidation. "Both the bride and the bridegroom are ready. Only their families need to say yes," he said.
In other words, the players are ready for the merger move but employees, affiliated to trade unions, need to give their nod.
Last year, the government had chalked out a plan to merge two Mumbai-based banks -- Bank of India and Union Bank of India -- but it fell through due to stiff from trade unions.
A white paper on merger, prepared by the finance ministry, has given the rationale behind the proposed move but has refrained from giving any specific instance of merger between two public sector banks, as this is price-sensitive information.
Chidambaram has been harping on the issue ever since he took over as the finance minister in the UPA government. He wants Indian banks to achieve global scales through mergers and acquisitions. At present, only 22 Indian banks feature in a list of 1000 global banks and just one finds a place among the top 25 Asian banks.
According to sources, the Left will not oppose the move once the leaders of the Centre for Indian Trade Union, its trade union wing, endorses the policy.
The members of the All India Bank Employees' Association, the banking union affiliated to the CPI, account for about 50 per cent of the industry's work force.
The second in command is a non-political outfit -- National Confederation of Bank Employees. The members of the CPI(M)'s banking union, Bank Employees Federation of India, accounts for about 10 per cent.
The members of Indian National Bank Employees' Federation (Congress), the National Organisation of Bank Workers (BJP) and Bank Karmachari Sena Mahasangh (Shiv Sena) together account for a very small part of the industry.