The Save SBT Forum and 11 other petitioners have filed a writ petition in the Kerala High Court seeking a stay on the proposed amalgamation of State Bank of Travancore with its parent State Bank of India.
Specifically, the petitioners have sought interim relief of stay on the decision of the respondents — Union of India, State Bank of India (SBI), State Bank of Travancore (SBT), and Reserve Bank of India — regarding acquisition of SBT by SBI and all further proceedings thereon and to maintain status quo by the parties, till the final disposal of the petition.
In its petition, the forum has prayed that the court issue a writ directing the Union of India (Ministry of Finance) to engage appropriate agencies/authorities, including the Comptroller and Audit General of India, to investigate into the (allegedly) vested and deviated practices and policies followed by SBI and SBT in showing low profit (for SBT) for the year 2015-16 and net loss for the first quarter of 2016-17 by showing excessive provisions and other charges, against the norms of RBI.
The petitioners, who also include three shareholders and two borrowers of SBT, want the court to declare that SBT is duty bound to continue with its existing regional banking services with various social welfare measures, rather than wealth creation and profitability alone, since it is a public sector bank having responsibility and accountability towards the general public.
They also want the court to issue a writ directing the respondents — Union of India, Department of Financial Services, SBI and the RBI — to disinvest SBI’s shareholdings in SBT and other associate banks so as to raise capital funds for the future operations and to permit SBT to function independently with existing characteristics and resources.
The decision to merge SBT with SBT has become a political issue in Kerala with the Left Democratic Front Government moving and passing a ‘motion’ in the Kerala Assembly on July 18 against the acquisition of SBT by SBI and demanding that the Centre and the RBI withdraw the acquisition/merger decision.
According to the ‘motion’, the merger move is against the interests of the State of Kerala as a whole since a major part of the financial transactions of the Kerala government are being carried out by SBT, the largest public sector bank in the State.
SBI is planning to amalgamate its five associate banks — State Bank of Hyderabad, State Bank of Patiala, State Bank of Bikaner & Jaipur, State Bank of Mysore and SBT — with itself by the end of this financial year.
In an interview to BusinessLine , Chairman Arundhati Bhattacharya had said there were a lot of inefficiencies now on account of duplication.