Why bank unions in coastal Karnataka are upset with mergers of public sector banks

The merger of Syndicate Bank with Canara Bank and the merger of Corporation Bank with Union Bank of India and Andhra Bank, raised eyebrows across the country but in Dakshina Kannada and Udupi districts in Karnataka, the news came as a rude shock to a section of its residents.

A protest was held in Mangaluru on Wednesday against the merger of the banks founded in coastal Karnataka. The protest was organised by the unions of the banks being merged and supported by a number of like-minded groups, including the Bank Employees Federation of India (BEFI), Democratic Youth Federation of India (DYFI), Centre of Indian Trade Unions (CITU) and the All India Kisan Sabha (AIKS).

"At a time when we should be celebrating 50 years since the nationalisation of our banks, we are dealing with its merger. Dakshina Kannada is considered the cradle of banking. All four public sector banks are based here (and in Udupi). Out of them, the history and the identity of three banks have been wiped out and only Canara Bank's identity remains," BM Madhav, state vice president of the Bank Employees Federation of India (BEFI) said. 

 The protests come eight months after similar protests were held opposing the merger of Vijaya Bank, another bank founded in Mangaluru, with Bank of Baroda. "We are not surprised because we held protests after the merger of Vijaya Bank with Bank of Baroda. People were emotional about the decision to merge but it is a decision we have to accept because people in this region voted for this government,” added Muneer Katipalla, state president of the DYFI. 

Protest against the merger of Vijaya Bank in Mangaluru in January 2019

It was in the two coastal Karnataka districts that Canara Bank, Syndicate Bank, Corporation Bank and Vijaya Bank were founded before India gained independence. Karnataka Bank was also another bank founded in Mangaluru. All five banks were established by philanthropists belonging to different communities in the region. 

The first of the banks to be built was Corporation Bank in the temple town of Udupi in 1906 by Khan Bahadur Haji Abdullah Haji Kassim Bahadur Saheb (Haji Abdullah). The bank was nationalised in the second round of nationalisation in 1980 by the Indira Gandhi-led Union Government.

Canara Bank was built by Ammembal Subba Rao Pai in Mangaluru in the same year. Ammembal belonged to the Gowda Saraswat Brahmin community. It was nationalised in 1969 in the first round of banks nationalised by the Indira Gandhi-led Union Government.

Syndicate Bank was formed in 1925 by TMA Pai, Upendra Pai and Vaman Kudva. Its headquarters is in the student town of Manipal. At the time of its establishment, the bank was known as Canara Industrial and Banking Syndicate Limited and it was formed to assist local weavers affected by a crisis in the handloom industry. It was later nationalised in 1969. 

The other bank to emerge from coastal Karnataka was Vijaya Bank which was founded by a group of farmers led by Attavar Balakrishna Shetty on Vijayadashami day in 1931 (hence the name 'Vijaya'). Farmers from the agrarian Bunt community came together to form the bank to help cultivators in the region. It was nationalised in 1980.

"The idea of starting the banks was to ensure that common people had access to banking services because, in those days, all the banks were controlled by the British. This was an alternative provided by philanthropists who came together with a similar ideology," explains KS Balachandra Rao, former general manager of Canara Bank.

Balachandra Rao worked in Canara Bank for 41 years, from 1973, and retired in 2014. He laments that the legacy of coastal Karnataka's banks will now be taken over by other banks that were merged with it but he admits that this is something people in coastal Karnataka have to accept. "At some point, we have to look past the emotion attached to this."

He expressed hope that the merger of Canara Bank and Syndicate Bank, two banks familiar in the region, will lead to banks being built in villages currently without one.

"If in a particular place, there is a branch of Canara Bank and a branch of Syndicate Bank, the banks will decide whether two banks are necessary and based on the preference of the local population, one bank will be moved to another place. This could lead to newer areas being included in the banking map," says Balachandra.

But for employees and families connected to the banks, the mergers signal the end of a legacy spanning decades.

"During the merger, the banks local to Dakshina Kannada and Udupi should have been merged with each other but Corporation Bank and Vijaya Bank were merged with banks elsewhere. This will not inspire confidence among the people in this region," added Madhav.