The Hindu : Other States / Pondicherry News : Bank merger move `threat to rural branches'

Online edition of India's National Newspaper
Monday, May 16, 2005

Other States

Other States - Pondicherry

Bank merger move `threat to rural branches'

Staff Reporter

'Credit flow will be hit'

PONDICHERRY: The general body meeting of the Indian Overseas Bank (IOB) Officers Association held here on Saturday rejected as `false' the claim of Union Finance Minister that merger of banks would result in increased financial strength of the banks.

A release from the Association at the end of the meeting said that the government was mulling merger of strong banks that had earned good profits in recent years with strong capital adequacy ratio.

If in the name of new economic policy the government embarked on merger of banks it would be a definite threat to the survival of rural branches and the rural economy would be set back. Credit flow to agriculture and priority sectors would be severely affected impairing growth of the country's economy, the Association felt.

The Association also alleged that foreign and new generation banks with profit motive were concentrating only in urban and metropolitan areas for their business and had neglected rural areas and priority sector.

Such banks resorted to illegal methods of recovery of loans, the Association said.

The public sector banks were on the other hand increasing credit flow to farm sector and small industries.

They had also fine tuned customer service and had become a competitor to new generation banks.

The Association felt anguished over the pampering of privatisation and merger of banks by the government.

The Association appealed to the government to drop merger move and encourage banks for higher performance.

Printer friendly page
Send this article to Friends by E-Mail

Other States

News Update

Stories in this Section

87,000 children immunised

Bank merger move `threat to rural branches'