People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)

Vol. XXX

No. 16

April 16, 2006

Successful Strike By SBI Staff


W R Varada Rajan


OVER two lakh employees of the State Bank of India commenced an indefinite strike on April 3, 2006. The nation-wide strike was on the demand for a comprehensive review of the pension scheme that had been in vogue for several decades. The strike was total in all the 9,000 branches of SBI, with the officers and employees under the banner of the All-India State Bank Officers' Federation (AISBOF) and All India State Bank of India Staff Federation (AISBISF) staying away from work.


With the government forced to come down and conceding the demands of the staff, the seven-day strike was withdrawn by the employees. The CITU general secretary Chitrabrata Majumdar in a congratulatory letter to the employees on April 11 hailed it as a glorious victory in the backdrop of the adamant stand adopted by the finance ministry. "It is the rocklike determination and solidarity manifested by the lakhs of your members that forced that ministry of finance to come down from its ivory towers and to accede to the genuine demands of the workforce in the larger unit of public sector banks in the country", he stated.


While the bank offices remained shut during the strike, the strikers have been holding daily demonstrations in front of them, joined by large numbers of pensioners and family pensioners.


The United Forum of Bank Unions, an industry level umbrella organisation, comprising nine federations of bank officers and employees had extended support to the strike in SBI.




In the entire banking industry, State Bank of India was the first institution to have a pension scheme for its staff in place, since several decades. Subsequently, as a result of an agreement between the Indian Banks Association and the bank unions, a pension scheme was introduced covering the employees and officers of the other banks as well. The Reserve Bank of India also introduced a pension scheme for its staff. But, the pension scheme of the State Bank of India had remained almost unchanged, even while these schemes were introduced in other banks. Moreover, the family pension had not been revised in the last 20 years.


A major discrepancy in the pension scheme for SBI, when compared with the other public sector banks, is that for SBI staff there is a ceiling on pension income, fixed at Rs 5,600 per month for calculation of monthly pension payable, whereas for the rest of the banking industry it is 50 per cent of the last pay received with no ceiling. Hence, the staff of SBI had been demanding, inter-alia, the following: " Pension at 50 per cent of the last drawn salary; commutation on par with industry; index-linked dearness allowance on pension on par with industry; and upgradation of basic pension of all past retirees taking into account the current merger of index at 2,288 points " . The present strike is, in the main, on these demands.




The strike had hit the banking operations in the country with the cheque-clearing, forex and call market operations seriously affected. SBI handles 25-30 million transactions a day and as such the strike had a paralysing impact throughout the country. The Reserve Bank of India (RBI) took over the clearing operations in most of the major centres operated by the SBI, but transactions involving the SBI could not be processed, thus the clearing operations remained affected for most part.


The SBI also has to its credit the largest number of Automatic Teller Machines (ATMs) throughout the country. Though these SBI ATMs were operational on the day of commencement of the strike, when the machines ran out of cash the ATMs were also affected.


Ironically, the strike prolonged, despite both the parties to the strike the management and the staff declaring that they were prepared for a dialogue to resolve the issues involved. A K Purwar, chairman, SBI, said, "We are trying to sort out the issue. We are talking to all concerned (the unions, the government etc) and hope to find a solution soon." From the staff side, T N Goel, vice president, All-India SBI Officers Federation stated: "We are willing to talk and negotiate on the issue if the government calls us."




The representatives of the striking staff had a discussion with the union labour minister on April 2, along with a representative of the finance ministry. It was reported that the unions were asked to put the issue on hold until the assembly elections, under way in five states, are over. But the unions refused to budge without a firm commitment on meeting the demands.


The major roadblock to a settlement of the strike was the stand taken by the finance ministry, with senior officials indicating that the government was not in favour of acceding to the demands as it could result in similar demands being placed by other state-owned banks.


Another round of conciliation meeting with the chief labour commissioner was held on April 5, but there was no outcome. The finance ministry had a grand design. It is keen to push the New Pension System (NPS), which has been imposed on the government employees recruited after January 2004, to the arena of financial sector as well. In fact, the pension sector reforms actively pursued by the finance ministry aims at liquidating the very concept of defined benefit pensions. This is one core aspect of the problem.


The CITU had extended support to the strike by the employees and officers of the State Bank of India. It held the finance ministry, which had taken an unrelenting stance, as responsible for the present impasse and demanded the intervention of the prime minister.




The strike by employees of SBI continued for a whole week for wisdom to dawn upon the finance minister to extend an invitation late on the evening of April 8 to hold further negotiations. After hectic day-long negotiations on Sunday (April 9) between the management and the unions in the presence of top finance ministry officials, a new formula on the pension issue was agreed upon. 


Under this, the fresh `cut-off' of basic pay for determining pension has been increased to Rs 21,040 from Rs 8,500. All employees earning a basic pay of Rs 21,040 would get pension at 50 per cent of that amount, while those earning above that level would get 40 per cent for the incremental amount above Rs 21,040 "subject to a minimum of 50 per cent of Rs 21,040".


With this successful resolution of the pension issue, the seven-day long strike was called off. Announcing the settlement, the finance minister commented, "The financial implications are within the financial capacity of SBI." Here comes the moot question: If that is so, who is responsible for the inconvenience caused to the banking public and who inflicted the enormous loss on the leading public sector bank? The answer is simple: 'It is the ego of the finance ministry that held the bank, its employees and the public to ransom for a week.' Thankfully, the agony has ended!




The finance minister also hoped that the revised package was not expected to result in similar competitive demand from other public sector banks, as other nationalised banks had their own formula. But, he would do well to remember that following the last industry wage settlement of 2005, the bank unions and the Indian Banks Association had been in dialogue over the long pending demand of the employees of other banks for an opportunity to exercise the option for the pension scheme.


This is yet another dimension to the pension issue in the banking sector, which could plunge the entire industry into a crisis. The finance ministry had been sitting tight-lipped over a demand of the bank unions for one more option for pension and upgradation of pension in the other PSU banks. When the pension scheme for the staff of the other PSU banks was introduced in the 90's, it provided for an option of choosing either pension foregoing employer's contribution to provident fund or availing employer's contribution to provident fund, foregoing pension. The employees, who at that time did not opt for pension, constitute a significant number and want to opt for the same in the changed scenario of falling interest rate regime. This demand is strengthened by the fact that the RBI, which introduced a pension scheme later, had provided such option to its staff at the time of subsequent wage settlements.


Is the finance ministry bracing for another stand off on this? Or will it respond in time to the wake up call?