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Nainital Bank Faces Privatisation Move Amid Staff Protests
Bank of Baroda ready to divest its entire 98% stake in Nainital Bank, with Premji Invest in advanced talks to acquire majority stake. Employees demand merger with parent bank BOB instead of privatisation.
Author: Abhivad
Published: June 27, 2024
Indications have emerged that Bank of Baroda (BOB) is set to divest its entire 98% stake in Nainital Bank. Premji Invest, the family office of Wipro founder Azim Premji, is reportedly in advanced discussions to acquire the bank for approximately Rs 800 crore.
Divestment Plans
Reports suggest that Bank of Baroda, the majority shareholder in Nainital Bank, is ready to divest its entire stake. According to The Economic Times, Premji Invest is close to finalising the acquisition. The expected value of this transaction is around Rs 800 crore. Nainital Bank, headquartered in Nainital, Uttarakhand, has a network of 168 branches spread across Uttarakhand, Rajasthan, Uttar Pradesh, Delhi, and Haryana. As of September 2023, the bank's loan portfolio stood at Rs 4,654 crore, with total deposits amounting to Rs 7,809 crore.
(A demonstration as part of the strike organised by NBOA on 15 June 2024. Picture Courtesy: The Lucknow Tribune.)
Employee Opposition
The staff of Nainital Bank have strongly opposed the move towards privatisation. They are advocating for a merger with their parent bank, BOB, instead. The Nainital Bank Officers’ Association (NBOA) has been at the forefront of the protests. On 15 June 2024, the NBOA organised a strike, demanding the retention of the bank within the public sector. Their primary demands include a merger with BOB, halting the divestment process, and stopping the sale of the bank’s licence. They also want the recommendations of the Petition Committee of Parliament and the Reserve Bank of India (RBI) for the merger with BOB to be implemented.
AIBEA's Stand
Devidas Tuljapurkar, All India Joint Secretary of the All India Bank Employees Association (AIBEA), commented on the issue, stating that AIBEA opposes the privatisation of Nainital Bank. "Nainital Bank and its assets, infrastructure, and customer base, particularly in the rural high ranges of Uttarakhand, should be retained within the public sector," he said. He emphasised that corporate entities prefer acquiring existing public sector banks due to their established infrastructure, client base, brand name, and goodwill. "At this juncture, it is crucial for Nainital Bank to be merged with BOB, which holds 98% of its shares. Sustaining as a standalone bank would be challenging for Nainital Bank", Tuljapurkar added.
The future of Nainital Bank remains uncertain as discussions of divestment and potential acquisition by Premji Invest continue. Meanwhile, the bank’s employees remain firm in their stance against privatisation, advocating for a merger with Bank of Baroda to ensure the bank's continued operation within the public sector.
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