People's Democracy

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


No. 35

September 02, 2012




Fighting Privatisation Move, Attacks on TU Rights


Pradip Biswas


THE banking industry of the county came to a grinding halt on August 22 and 23, with around 10 lakh employees and officers striking work at the call of United Forum of Bank Unions (UFBU), a joint platform of nine all-India organisations of employees and officers. Bank gates remained closed on these two days, clearing houses remained inoperative, and a large number of employees and officers as also retired ones picketed before bank gates from early morning. The strike was to oppose the Banking Laws (Amendment) Bill 2011 and the neo-liberal reforms of banking sector being pursued by the UPA government, and also ventilated some other demands. Processions, mass meetings and rallies were organised in metros and other important centres. The strike was thus a stupendous success.


It is notable that the Banking Laws (Amendment) Bill 2011 was scheduled to be taken up for enactment on August 22, the day the strike commenced, but the government could not proceed because the Lok Sabha had to be adjourned due to uproar over coal block allotments.


The bank unions are also opposed to the outsourcing of regular jobs hitherto done by regular workforce. This would not only endanger the job security of employees but also compromise the secrecy of the personal and commercial finances of the banks’ clientele. The strike also opposed the anti-employee recommendations of the Khandelwal committee and unilateral implementation thereof by public sector banks (PSBs), and the threatened closure of rural branches of PSBs and handover of the banking business in the countryside to private entities, etc.


The bank employees’ unions say while the global financial crisis from September 2008 onward swept away banking giants like Bear Stearns, Lehman Brothers, Merrill Lynch, Northern Rock and Freddie Mac etc, the Indian banking system survived because of the public sector’s dominance in the industry. The credit goes not to the government but to the sustained and relentless struggle of the ten lakh bank employees and officers, along with the democratic movement, spanning over two decades.


But despite these experiences, the policy makers of our country are hell bent on denationalising the banking sector in accordance with the prescription of global finance --- to the detriment of our national interest. All the committees appointed by the government of India --- from Narasimham committee to Khandelwal committee --- were made to recommend the privatisation of financial sector. Moreover, bank managements also employed foreign consultancy firms like Gartner, Price Water House Cooper, KPMG, Mckinsy, Accenture and Boston Consultancy Group, to get suggestions for business restructuring, but these too prescribed stunningly similar and recipes.


The striking unions said while the Banking Laws (Amendment) Bill 2011 talks of the necessity for the banking companies in India to raise capital in accordance with the international practices, it aims at total privatisation of the banking sector. The unions therefore said every section of the people, and more particularly the bank employees and officers who are the forerunners of struggle against privatisation of PSBs, must be aware of the dangerous consequences of the proposed amendments.


After minutely analysing the provisions of the proposed amendment bill, the employees’ unions have come to the following conclusions: 


1) The legislation would open the possibility of unrestricted mergers of banks without waiting for approval of Competition Commission of India. This would lead to closure of bank branches at random.


2) The bill seeks to include securities issued by private corporate houses within the definition of “approved securities.” But if banks invest in such securities, it would expose the hard earned savings of common people to unwarranted risks of highly volatile market in the present dispensation.   


3) By seeking to increase the voting rights of foreign investors in private banks from the present 10 to 26 per cent, the bill would offer these banks on a platter to foreign investors. The latter would gradually take these banks over and misappropriate the huge deposits in their own interests.


4) The bill proposes to raise the ceiling on voting rights of shareholders of nationalised banks from one to 10 per cent. This will further increase the voting strength of private and foreign shareholders in nationalised banks, further dilute the nationalised character of the PSBs and adversely affect the purpose and practice of social banking in our country.


Unions have also recalled that in recent past some private stakeholders of Coal India moved the court for more dividends, complaining that the Coal India authority is wilfully compromising the dividends they deserve. By virtue of their increasing voting rights, the private stakeholders may the same in PSBs in near future and thus endanger the interests of the wider public.


On October 22, 2009, the government of India constituted a committee under the chairmanship of Dr A K Khandewal, former chairman and managing director of the Bank of Baroda, for conducting a study on human resources issues in public sector banks and making appropriate recommendations. The committee submitted its reports in June 2010. The government has accepted 56 specific recommendations in the first instance and instructed the PSBs to implement them.


The unions have taken exception to many of these recommendations and are opposed to them. One such recommendation is that each PSB must reach an office-clerk ratio of 1.0-0.5 in metro and urban branches and of 1.0-0.75 in rural and semi-urban branches in the next three years. But it would mean that there will be four offices for every two clerks in metro and urban branches and four offices for every three clerks in rural and semi-urban branches. As a result, the number of clerks will be reduced alarmingly.


Another recommendation is that banks should outsource more and more non-core activities in a time bound manner. This means that all normal, regular and perennial jobs would be given out on contact. Thus the requirement of permanent staff in banks will be automatically reduced.  


The recommendations would also give the managements full freedom to transfer their employees or officers at whim and also to curtail the trade union rights in lieu of a wage revision.                            


Moreover, PSBs boards would decide the bank-specific wage and compensation structure, on the basis of capacity to pay, profit, productivity, etc. Bank boards can also introduce variable pay as a major component of wage.


The Khandelwal proposals seek to dismantle the present system of industry level common bipartite settlement, in vogue since 1966. This will also distort the present system of uniform wages and service conditions for all banks, and thus to divide the bank employees and officers.


In Chapter 8, entitled “Reward Management,” the committee has suggested huge bonanzas --- in the name of financial incentives --- for those in the management. The recommended sum of incentive would range from Rs 18 lakh to 35 lakh yearly for the CMDs of public sector banks, in addition to their usual pays and perks. This is an extension of the private sector culture.


It is such recommendations that the bank employees’ unions say they are committed to fight. Bank employees have been fighting against the neo-liberal ‘reforms’ since the early 1990s and the latest two-day strike was the 44th in the industry, including 14 general strikes, since 1991.