Banking industry, its perspecive and agitation for wage revision

Mukti Agarwala

Bank Officers and Award Staff (Clerical and Subordite) are on war path for revision of their wages during the year 2014. Every five years, wages of the Bank men are revised upwards since 1965. The wage revision for the Bank men is due effective from the first day of November 2012. The United Forum of Bank Unions (UFBU), the umbrella organization of 27 Banks in the country, had submitted its charter of demands well in time. But since the elections had become due, no discussions took place till formation of the new Government. After formation of the new Government at the Centre, the Indian Banks Association (IBA), the organization of the Bankers, started negotiations with the UFBU. But the minds of the IBA heads were not at all positive for an early settlement and they offered to pay a paltry 4.5% increase of pay packets to the Bankmen against their demand for a 30% increase, in view of the high price increases and the falling of wages of Bank men, compared to the wages drawn by the employees of the Corporate and Central Government. Their demand was scaled down to 25% for the sake of early settlement. Since the first wage settlement, wages of Bank men are revised after discussions bilaterally. The Bankmen, under the banner of UFBU, had several rounds of agitatiol programmes, including strike actions all over the country on a number of days. They had one day All India Strike lastly on November 12 followed by relay zol strikes from 2nd to 5th December. The UFBU has called for a day's strike on the 7th January 2015, 4 days strike from 21st to 24th January, which would be followed by indefinite strike from 16th March onwards. The Indian Banks Association is sticking to its offer of the uccepted offer of 11% increase in wages of Bank men.

The IBA is in the retreat saying idequate paying capacity of the Banks, which is not at all true. When a Bank, like Lehman Brothers failed and saw extinct, not a single Indian Public Sector Bank failed. The history of Indian Public sector Bank has remarkable glory since tiolization of its first Bank, the Imperial Bank of India which was tiolized in the year 1955. Later the Indira Gandhi led Central Government took a historic decision to tiolize 14 Indian private sector Bank in the year 1969. Later, in 1980, another 6 Indian Private sector Banks were tiolized. This was a momentum decision of the then Congress Government at the Centre. The total number of public sector Banks in India is 27, which has shown a paradigm shift of the Indian economy. The poor peasantry, rural business houses, not to speak of large industrial houses, are the biggest beneficiaries of the Indian Public sector Banks. Recognizing the sensitive ture of the banking industry, many countries with predomintly capitalist economic structures thought it fit either to tiolize their banks or to subject them to rigorous surveillance and social control. France, Italy and Sweden were typical examples in this respect. Thus, the environment, motivation and ratiole for the tiolization of banks existed (and justified the action in 1969). The declared objectives of tiolization were:

(i) wider territorial and regiol spread of the branch network; (ii) better mobilization of fincial savings through bank branch; (iii) re–orientation of credit development in favour of small and disadvantaged classes all along the production spectrum; (iv) removal of control by a few business houses (and that too with microscopic capital stakes), (v) the conferring of a professiol bent to bank magements, and (vii) the provision of adequate training and reasoble terms of service for bank staff. It bears stating that public ownership of banks serves a number of overarching objectives. By suborditing the profit to social objectives, it allows the system to exploit the potential for cross subsidization, to direct credit to targeted sectors, despite differential costs, and disadvantaged sections of society at differential interest rates

       The Bank magements have often cited rising non–performing assets (NPAs) of the banking system for their ibility to pay higher wages. But the Bank employees are not responsible for the NPAs. It is the Corporate houses, monopoly capital, and the influential politicians who are the igniters of NPAs. PSU Banks including SBI, PNB and Central Bank of India wrote off Rs. 34,409 crore loan in 2013–14 including one time settlement, which constitute 34.05 per cent of the total non–performing assets. However, the high level of NPA is a cause of worry to any fincial institution. Developing of sound and healthy fincial institutions, especially banks, is an essential condition for maintaining over all stability of the fincial system of the country. Increase in NPAs of banks is mainly accounted for by switchover to system–based identification of NPAs by PSBs, slowdown of economic growth, and aggressive lending by banks in the past, especially during good times. As PSBs domite the Indian Banking Sector and increase in the NPAs of PSBs is a matter of concerns, steps are being taken to improve the situation.

    A strong banking sector is important for a flourishing economy. The failure of the banking system may have an adverse impact on other sectors thus, there is need to ensure that the banking system recognizes fincial distress early, takes prompt steps to resolve it, and ensure fair recovery for lenders and investors so that banking sector functioning without stress. It is clearly evident that common Bank men are no way responsible for siphoning of public money. However, despite this, it cannot be accepted that Banks do not have paying capacity to its people, as Indian Public Sector Banks are making good profits.

Despite a strong Public Sector banking scerio in India, the Government is planning to give Bank licences to Corporates taking into account the recommendations of various Committees and the vested interest they may serve. The Central Government has already given licenses to two Corporate houses to open Banks in India which is not in the interest of the common masses of the country. The Government also should learn from the failures of many large size Banks in USA and should not proceed with merger of Public Sector Banks.

    Regarding payments to the public sector bank employees, SBI Chief, the Chairperson of State Bank of India, Arundhati Bhattacharya said that there is an urgent need to provide better remuneration to attract good talent. She has said that Bankers are paid very poorly in India as compared to their counterparts elsewhere in the world. "Let me start with income of banking professiols in India. Here 70 percent of the banks are in public sector and they are paid very poorly compared to market," she said at Delhi Economic Conclave. The comment came about a week after PSU bank employee unions went to a four day relay strike to press for early revision of wages.

    The PSBs domited the banking business in the country. In 1990–91, they accounted for as much as 91 percent of the total assets–with Private Indian Banks with 3 percent and Foeign Banks with 6 percent. After entry of number of new Private Indian Banks in the mid 1990s, the Indian Banking Industry continued to be domited by the PSBs. At the end of 2000–2001, PSBs accounted for a little under 80 percent of total assts with Indian private sector with over 12 percent and foreign banks with 8 percent.

A study reveals that around 60% of gross profit of Banks is transferred as provisions every fincial year. Stringent laws and mechanisms to be put in place to arrest the mece of NPAs and place the details of defaulting borrowers on public  domain.

The Bank Officers and employees need decent wage hike. Today they are paid less than the Government employees as well as private sector employees. Further for the new entrants, a new Pension Scheme has been introduced in the Public Sector Banks which immediately needs to be scrapped and they should be made entitled to the earlier assured Pension Scheme which would be a great incentive to the new people joining the PSBs.