The Nainital Bank Ltd (NBL) was originally promoted by Bharat Ratna Late Pandit Govind Ballabh Pant in the year 1922 and in 1974 RBI directed Bank of Baroda (BOB) to manage the affairs of NBL. At present BOB holds 98.57% stake in NBL. With its registered office in Nainital, the bank has 166 branches spread over 5 states with 1158 employees. The March 2022 figures show the NBL has deposits of Rs.7486 Crores and advances of Rs.4212 Crores with a net profit of Rs.28.93 crores in FY2022 as against Rs.1.26 Crores in FY 2021 with gross and net NPA being Rs.508 Crores and Rs.164 Crores respectively.
The management of Bank of Baroda has decided to divest a majority stake and relinquish control of its subsidiary by bringing in a strategic partner in order to create more value in the 100 year old NBL stating that there is a need for additional capital to meet its business growth and improve technological infrastructure. BOB in its Preliminary Information Memorandum says it is a good opportunity for NBL to transform itself from a traditional bank into a technology-based bank to further grow. BOB has issued an advertisement inviting expression of interest (EOI) from interested parties.
Under the present regime, bank mergers have taken place under the guise of consolidation and strengthening of PSBs, whereas, the real reason being privatisation of PSBs which is being pursued by the Ministry of Finance in spite of opposition from Bank Unions and general public. As such, this decision of BOB is clearly as an attempt to handover the 100 year old Nainital Bank Ltd to private players/corporates. While the Central Government is seriously contemplating a strategic sale of two PSBs, to start with, this move by BOB management is nothing but recognition of the Government’s move to privatise PSBs of which BOB may also be the victim. In the interest of the customers of NBL and in the general interest of Public Sector, it would be prudent for BOB to shelve this decision to offload the shares of NBL. It is the need of the hour to strengthen the public sector banks in order to serve the masses and improve their standard of living. If NBL, the subsidiary of Bank of Baroda goes into the hands of the corporates, will serve only the interest of the elite and is prone for top level corruption as is seen in many private sector banks. Hence BOB should rescind its decision and not only maintain the status quo but also work for the development of 100 years old Nainital Bank Ltd.
UFBU, in its meeting held on 15th December 2022 at Chennai, has taken serious note of this situation. The unions in BOB have also protested against this stand of the BOB management. It is time to force BOB management to give up this sinister move if it does not relent.