The Hindu Business Line : Centre asks bank unions to call off stir plan

New Delhi, Sept. 14 The Centre has asked bank unions to call off plans for a stir later this month against the proposed financial sector reform measures.

Terming the strike call given by the United Forum of Bank Unions (UFBU) as “uncalled for and unjustified”, the Finance Ministry, in a statement on Sunday, said any such strike will cause inconvenience to people, forcing customers to switch to private sector banks.

The UFBU had threatened last month to go on a two-day strike starting September 24 to protest against the Government’s plans for merger among the public sector banks, privatisation proposal and reported plans for amending the Banking Regulation Act.

Expressing hope that the proposed strike will be called off, the Finance Ministry, on the issue of the privatisation of public sector banks (PSBs), clarified in its statement that the proposed move will not lead to transfer of control and management of these banks to the private sector.

The Government will hold 51 per cent of equity in the PSBs and the features of public sector will be preserved, the statement said.

Merger proposal

The Ministry also said that with respect to the proposal to merge PSBs, the initiatives for the process have to come from the management of the banks themselves and “no specific directions in this connection have been issued by the Government or the RBI. It has been only emphasised that the process of consolidation is necessary to improve the state of competitiveness of Indian banks globally.”

It said that the Government has no proposals before it from banks for merger.

Act amendment

On the issue of amending the Banking Regulation Act, the Government said the amendment is necessary to give shareholders of private sector banks voting rights commensurate with the equity held by them. Also, the amendment does not impact the ceiling on voting rights in PSBs, as there is no proposal to amend such ceiling provided in the Acts administering them, the Ministry added. Further, the statement said, a section has been inserted in the Act that makes it mandatory for seeking the Reserve Bank nod before acquiring 5 per cent or more shares for voting rights of a banking company.

The Government has initiated dialogue with UFBU and has asked the Indian Banks Association and UFBU to arrive at a mutually satisfactory settlement soon, it added.

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