Delhi HC issues notice against bank merger move

3-way bank amalgamation proposal raises serious questions

NEW DELHI: The Delhi High Court on Tuesday (Jan 15) has issued notice against the proposed amalgamation of Vijaya Bank, Dena Bank and Bank of Baroda (BoB) – a move that has created headlines in the past few months.

The notice was issued in response to the petitions filed against the proposed three-way merger by All India Bank Officers’ Confederation (AIBOC) representing 3.2 lack members and All India Vijaya Bank Officers’ Association.

The Hon’ble Court has also reiterated its earlier direction to place on record all relevant files/ records and minutes of the meetings in connection with the amalgamation proposal, and listed the matter for final hearing on February 13.

The petitions that challenged the scheme of amalgamation published on January 2, 2019, had also raised serious concerns about the decision-making process involved in going ahead with the merger of the said three banks.

The unions accused the Government of India of not having acted like an ideal promoter and instead presented a fait accompli to the bank boards.

The petitions observed that the decision-making process itself was debauched on several fronts, leaving the very move by the government questionable for several reasons.

The unions maintain that the boards of the respective three banks, which are public listed companies, have acted on diktat of the government, which is totally uncalled for.

Soumya Datta, general secretary of AIBOC, said that there has not been any prior consultation with RBI on the merger move, which is in clear violation of the Banking Regulation Act and Bank Nationalisaiton Act.

The unions seriously doubt that the concurrence of the respective bank boards involved in the merger has been made possible under compulsion.

The bank boards’ decision does not have the endorsement from the ‘officer & workmen’ directors, the posts mandated under the Bank Nationalisation Acts, as these posts remain vacant for more than three years now despite orders from Delhi High Court on yet another related petition filed by AIBOC.

The petition has also questioned the logic and merits of the decision why Vijaya Bank, presently a profitable bank with a positive RoA, should merge with two other loss-making banks to form a bigger combined entity with a negative RoA even from the near medium term outlook.

 

 

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