PSU bank union opposes grant of license to payments banks

Alleges that it is a direct attempt to boost private sector banking

All Indian Bank Employees Association (AIBEA) has opposed grant of license to payments banks alleging that this is nothing but a direct attempt to boost private sector banking and to minimise the role of public sector banks, along with their market share.

In a statement, C H Venkatachalam, general secretary, AIBEA said Public Sector Banks (PSBs) in India have done yeoman services in changing the banking profile and transforming from class banking to mass banking.

"Our economy was saved from global financial and banking crisis only due to the reason that our Bank were insulated by Government controlled public sector banks. Our strong banking regulations helped in sparing the country from a major financial disaster. But in the name of banking reforms the Government is trying to dilute PSBs and boost private Banks," he said.

"All these are private corporate companies who had defaulted and it is strange that RBI and Government want to encourage the very same private sector to start Banks," said Venkatachalam, adding that bad loans of nearly Rs 6 lakh crore. As on March 31, 2015 there are 7,035 cases of wilful defaulters involving bad loans of Rs 58,792 crore. The bad loans in the banks as on March 31, 2015 has risen to Rs 2,97,000 crore excluding another Rs 4,03,004 crore of bad loans of 530 corporate companies shown as rescheduled and restructured loans under CDR scheme. Bad loans struck up in top 30 borrowal accounts of PSBs as on March 31, 2015 is Rs 1,21,162 crore.

Because of the thinning of margin and profits, Banks are striving hard to fetch low cost deposits like savings and current account and every Bank is concentrating on CASA deposits as the main route to improve their cost of funds and profitability.

CASA Deposits/Savings deposits of the common people are like oxygen to the Banks.

"At this juncture, giving license to such private companies to start payments banks whose main job is to collect savings and current account deposits will cut at the roots of the public sector banks," said Venkatachalam.

If these private payments banks are allowed to gather the savings and current deposits of the people which are of low cost, public sector banks will be deprived the same and hence the cost of banking services in PSBs will increase and rate of interest on small loans and priority sector loans will also go up.

"Allowing such banks in private sector is anti-public sector banks and, in the long run, anti-people. AIBEA opposes the move and has urged the Government to stop this policy of allowing payments banks in private sector," said Venkatachalam, adding that the union will be writing letters to the RBI Governor and Finance Minister not to go ahead with this policy.