Gramin Bank Unions oppose merger with Sponsor Banks

The staff associations at sponsor banks and their linked regional rural banks (Gramin banks) have turned into adversaries. Associations at Sponsor Banks have demanded merger of Gramin banks with sponsor banks but now the Gramin Bank Unions have opposed this. They said that mergers threaten the loss of identity for the rural banks. Gramin Bank unions have said that banks are performing well and should be seen with a different perspective.

Demand for Mergers:

The All India Bank Officers’ Confederation (AIBOC) and All India Bank Employees’ Association (AIBEA) are leading the demand for the merger of regional rural banks (RRB) with their sponsor banks, raising concerns about the operational efficiency of banks.

Opposition to the Merger:

In response, the Regional Rural Bank Employees Association has opposed the demand, presenting evidence to support their position. They highlight the improved performance of 43 RRBs, collectively earning a net profit of Rs 7,300 crore in FY24 and managing a substantial business portfolio.

Arguments for Merger:

AIBOC and AIBEA emphasized the financial challenges faced by some RRBs, with 16 out of 43 experiencing negative capital adequacy or capital levels below the mandatory 9%. They argue that merging RRBs with sponsor banks can address viability issues and provide access to the capital market, reducing dependence on budgetary support.

Counterarguments:

The National Federation of RRB Officers and the All India Regional Rural Bank Employees Association expressed opposition to the merger proposal, citing concerns about the impact on financial inclusion and labeling the proposal as objectionable and anti-employee.

Conclusion:

The clash between staff associations at mainstream and rural banks reflects a deep division over the proposed mergers, raising significant questions about the future of rural banking and the relationships between these allied groups in the financial sector.