People's Democracy

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


No. 29

July 17, 2011

Bank Employees to Strike, Aug 5


C P Krishnan


AROUND ten lakh employees and officers of the public and private sector banks, foreign banks, cooperative and regional rural banks, will observe a one day strike on August 5, 2011, in protest against the anti-people policies of the government of India. The action, which was to take place earlier on July 7, was rescheduled to synchronise it with the coming parliament session.




The call was given by the United Forum of Bank Unions (UFBU), consisting of nine organisations of bank employees and officers.  These have come together to protect the interest of the common people that is under severe attack. 


One may note that the UPA government introduced in Lok Sabha three retrograde bills on March 22, at the fag end of the budget session. One bill intends to remove the ceiling of 10 per cent voting rights of the shareholders in private banks; another is for raising the ceiling of voting rights of private shareholders from 1 to 10 per cent in public sector banks, and the third one seeks to dispense with formal approval of the competitive commission for merger of public sector banks. If enacted into laws, these bills will bring a sea change in the banking sector in favour of the corporates and against the interest of the common man of this country. Also, multinational corporations are likely to swallow the indigenous private banks if foreign direct investment is allowed to go up to 74 per cent in banking. If the ceiling on voting rights of private shareholders in public sector banks is increased to 10 per cent, it would create an opportunity for five or more corporates to form a syndicate and gain control of the public sector banks. This is precisely what the Raghuram Rajan committee has recommended.  While the signboard will say “A Government of India Undertaking,” the board of directors will be under the control of private corporates. 


The third bill is to enable faster merger of the public sector banks with one another. But while the government proclaims that it favours the merger of public sector banks so to consolidate the banking sector, it is giving free hand to the discredited non-banking finance companies (NBFC) to either convert themselves into banks or to float new banks. This clearly exposes the government’s double standard. The NBFCs have a track record of swindling thousands of crores of public money when they were freely allowed access to public deposits without any regulation.




Another dangerous preposition is to hand over the regional rural banks (RRBs) to private corporates or NBFCs. So far, 82 RRBs, having more than 14000 branches spread over hundreds of districts all over the country, have been excellently helping in ameliorating the rural poor’s lot in many ways. But, while crying from rooftop that it stands for inclusive growth, the government is out to hand the RRBs over to corporate houses. It is the proven record of the RRBs that 81 per cent of their advances are allotted to the priority sectors, which the new generation private banks and foreign banks hardly lend anything. While the public sector banks ask for a minimum balance of Rs 1,000 for cheque book facility, it is Rs 75,000 in case of foreign banks that otherwise charge a fine of Rs 350 per month.


Even though the successive governments at the centre since 1991 supported the new generation private banks, and tried partial or full privatisation of the public sector banks, the latter control 75 per cent of the total business mix in of the banking industry. When he was the finance minister, Dr Manmohan Singh inaugurated the Global Trust Bank (GTB), a new generation private bank, in 1994. But within a period of 12 years, it was forced to cease its activity and incurred huge loss of more than Rs 1,100 crore. Ultimately, in order to safeguard the depositors’ interest, the GTB was merged with the public sector Oriental Bank of Commerce that had to bear the entire loss. After the nationalisation of 14 major banks in 1969, several private banks became bankrupt and were merged with the public sector banks in the interest of the depositors.


Following the September 2008 crisis in the US, western countries witnessed closure of hundreds of private banks.  As a result, many countries resorted to nationalisation of the private banks. But, strangely, our rulers relish the same old bankrupt policy of privatising the public sector banks. 


In this regard, the finance minister Pranab Mukerjee’s statement before the US investors in Washington assumes significance. There he said the UPA government was committed to ‘reforms.’ “Reforms in the mutual funds market, insurance sector, banking sector, pension etc are underway and necessary legislations have been introduced in the parliament,” he said.


The Planning Commission deputy chairman Montek Singh Ahluwalia went a step further: “India should continue with the process of financial sector reforms and not look at further tightening the existing controls in the financial system…..There is a point of view that we avoided the crisis because we had a lot of financial controls and we would be well advised to tighten these controls further. This would be in my view wrong. We need to liberalise the financial system.” He further said the “government should reduce its stake in public sector banks to 33 per cent, as suggested by the Narasimham committee report, to make them more dynamic….. public sector banks, with reduced government holding, should no longer be governed by social objectives. The employees of the nationalised banks should have the same employment status as those in private banks….. The corporate governance norms too have to be improved so that directors and chief executives are appointed by shareholders and not the government.”


Coming from two important personalities of the government, these statements make it that the latter is bent upon privatising the public sector banks, handing their control over to private hands, selling smaller public sector banks to indigenous or foreign corporates, doing away with the social objectives and dispensing with the uniform industry-wide wage structure and service conditions.




Another important announcement is that the government would extend the banking services to many unbanked areas through a scheme called “Swabhiman,” through which it would achieve inclusive growth in 73,000 unbanked villages, in the first phase. However, it was simultaneously made clear that there won’t be any brick and mortar banking in these areas. Business facilitators or correspondents would be appointed through private corporates to extend the banking services to these villages.


But a bank would not directly engage or appoint these business correspondents. Clearly, the government wants to avoid the ‘risk’ of extending to them the same pay and service conditions as are enjoyed by employees of the nationalised banks. This is what happened in case of RRB employees. Thus the government wants the public sector banks to abandon the social objectives, which makes its claim of financial inclusion is highly doubtful. Besides, this move poses serious threats like exposing the interest and secrecy of the banking clientele and safety of the depositors’ money, while sealing lakhs of dignified jobs and increasing the exploitation of labour. While the bank employees are ready to extend the banking services to all the unbanked areas, this move of the government is clearly anti-people and anti-labour.


While the government doled out nearly Rs 10 lakh crore in the past few years to the corporates as tax concessions, it borrowed Rs 15,000 crore from the World Bank to recapitalise the public sector banks. This entails draconian conditionalities.


Recruitments to banks virtually stopped two decades ago but the volume of business has been fast increasing. The quantum of deposits and advances in public sector banks was at Rs 3,94,000 crore in 1991 and it rose to Rs 82,50,000 crore in 2010. That means the volume has increased by more than 20 times. At the same time the absolute number of staff has decreased by more than three lakhs. Another 3 lakhs are to retire in the coming five years.


But instead of filling up the vacancies through regular appointments, banks are outsourcing the jobs of even perennial nature to outside agencies. Most of the jobs like cleaning, security, movement of cash and cheques, issuance of credit-debit cards, recovery of dues, ATM cash loading, data entry, signature capture and a lot have been handed over to outside agencies. Recently a Reserve Bank of India circular detailed about a fraud involving more than Rs 1100 crore, both under consortium arrangement and multiple banking arrangement. One of its key causes, as the RBI diagnosed, was outsourcing of collection of Know Your Customer data. One is not sure if a proper lesson would be drawn even after this incident.




The Khandelwal committee, whose recommendations the government has accepted in toto, suggests that an end to industry-wide uniform wage revision, creation and widening of performance based disparity among the staff, drastic reduction in strength, doubling the number of officers compared to that of clerks, and wiping out the subordinate cadre. If implemented, these would bring about a situation akin to that in the IT industry. The idea is to eliminate trade unions in the banking industry and create deep disunity among staff members.


Besides, there are issues like improvement in the pension scheme, government approval to the bilaterally accepted compassionate employment and compensation scheme, regulated working hours for officers who are today made to toil for at least 14 hours a day and to do office work on Sundays and Holidays, five-day week etc.


The bank employees and officers are very much determined to take the bull by horns by observing a day’s strike on August 5. This will serve as a warning to the powers that be. The strike will be preceded by many explanatory campaigns and actions. It is a matter of great significance that all the central trade unions, which met in New Delhi on May 29, extended their support to the bank employees’ struggle. The success of the strike is sure to put the UPA government on the defensive and to safeguard the interest of the general public.