Battle of bank employees & pensioners
Bankers are instrumental in fulfilling government aspirations through implementation of schemes
July 19 comes with a historical landmark for the Indian banking industry. Bank nationalisation by then PM Smt Indira Gandhi has hit half a century. And, as this measure emanating from 'Garibi Hatao' slogan of Indira rule matures at 50, all is not well with the banking industry. While a substantial section of the government banking and finance machinery is inclined towards privatisation of banks, and merger of multiple banks into one, the employees are on streets often for ameliorating their terms of employment, the most recent one being March 30-31 two days long national strike for respectable wage revision (they have been offered 2 per cent increment valid for next five years).
The one million strong employees of all the government banks of India through their nine trade unions have decided to 'celebrate' this day to protest against growing signs and plans of privatisation of banks and for a higher wage revision and five days a week work-schedule. "The day shall be observed through seminars, workshops, sit-in demonstrations and rallies across the country to make the people aware of the importance of Bank Nationalisation and the ill motives of different authorities to privatise the nationalised banks. For example, in Kolkata, a big sit-in has been arranged at Rani Rashmoni Square where trade union leaders of different organisations will speak to commemorate public sector banking and oppose privatisation and unfair wages," notes bank officers' leader Sanjay Das.
The wage revision movement
Last June 12, the United Forum of Bank Unions (UFBU), representing these one million bank employees had met at Chennai to decide the next course of action after the last national strike on May 30-31, and this time the Forum intends to carry out a phase of public sensitisation on the issues at hand and also keep putting pressures on the Indian Bank Association and Department of Financial Services, Government of India, apart from various political parties. The initial response of the IBA and DFS has been cold, to say the least.
Earlier on May 30-31, the nine trade unions of government bank employees, 4 being of officers and 5 of others, had gone for two days long strike after they rejected the Indian Banks' Association's (IBA) proposal for a 2 per cent wage-hike. The salary-structure of bank employees is fixed up through a bi-partite settlement, unlike Central and State Govt employees. After every 5 years, the salary is hiked to have the protection against inflation. The last settlement was for the period 2012-17 was of 15 per cent, which was not matching with the then 6th Pay Commission. But this time the increment for the period 2017-2022, which came only a few weeks ago, seven months delayed, the employees expected a parity with the new 7th Pay Commission of the Central government, but rather was offered merely 2 per cent, on the plea of low profitability of banks.
There are about 85,000 branches of 21 public sector banks across the country having a business share of about 70 per cent. Industry chamber Assocham said that the last two-day nationwide bank strike had affected customer transactions worth up to Rs.20,000 crore. It also urged the government to come up with a stimulus plan for restoring the health of PSU banks. State-owned lenders are grappling with high levels of bad loans and as per reports, their losses for the quarter ended March 2018 are set to hit a record Rs.50,000 crore which is more than double the losses of Rs19,000 crore in preceding quarter ended December 2017.
The Chief Labour Commissioner (CLC) supported the issues and asked the Indian Banks Association (IBA) to respond positively. CLC said that officers and employees have to be paid for hard work and not based on profit. IBA representative said they will consider the revised offer but requested the UFBU to quantify the demand. UFBU leaders quoted figures to prove how operating profits have doubled, staff expenses reduced and business more than doubled.
Rationale for higher wages and NPAs of public sector banks
The 2 per cent wage hike will cost banks approximately Rs 500 crore, while the proposal given by the unions will cost around Rs 12000 crore, and this is surely open to negotiation. IBA and the Central government are linking it with the profitability but there was no hesitation to write off Rs 2.41 lakh crores in last 3 years, and gross NPA (Non Performing Assets) stands at Rs.6.41 lacs crores today, according to RBI figures, which was around Rs.3 lacs crores in 2014. For the last four years, banks have been earning operating gross annual profits ranging from Rs.1.3 lacs crores to Rs.1.6 lacs crores, but net profit is wiped out due to the bad loans, given not at the whims of employees and the faulty provisioning norms, but through political decisions.
As per RBI data of March 31, 2018, Non Performing Assets of government banks amount to Rs 6.41 lacs Cr, of which Corporate Industry NPA is around Rs 4.7 lacs Cr (73 per cent), Agriculture Sector NPA is Rs 57,000 Cr (9 per cent), Services Sector NPA is Rs 85,000 Cr (13 per cent), and Retail Sector NPA is around Rs 24,000 Cr (4 per cent). It is important to note that the Corporate Industry Loans are sanctioned by government-appointed Board Level Executives to corporate bodies like Bhushan Steel, Lanco Infra, Essar Steel, Amtek, Monnet Ispat, Reliance, Adani groups, and to people like Nirav Modi, Vijay Mallya, et al. Agricultural NPA is mostly due to Farm Loan Waiver policies by elected governments just before or after elections, and so such borrowers misuse loans as they have a sense of political entitlement. Services NPA is mostly like MUDRA loan, where the current Central government bars Banks to take collateral, and hence Banks cannot recover and the borrowers happily default. Retail NPA, accounting for around 4 per cent of all NPAs, is the only NPA where a common branch level Banker makes a sanction in form of Housing, Car, Personal Loan et al. Hence, the one million banking employees feel cheated today to be punished for the crime done by political decisions.
Interestingly, the government is not complying with the recommendations of its own appointed standing committee that the corporate deliberate defaulters' names should be published and the accountability of the board representatives be fixed as to who have given green signals for sanctioning loans to the deliberate defaulters.
Further, bank employees are the architects for fulfilment of all government aspirations through successful implementation of Atal Pension Yojana, Pradhan Mantri Awaas Yojana, Adhar-bank account linking, Mudra loan, Stand Up and Start Up projects funding, Jandhan accounts and the Herculean work following the ill-advised demonetisation, during which some 19 bank employees died on duty.
There indeed should be parity, co-relation, uniformity, and relativity of salary with others in insurance and other sectors of the government, matching with the status and the risk, responsibility, accountability and transferability we are to undertake. Further, the dissenting employees' charter of demands has asked for a five-day working week and more facilities for women employees.
As matters stand today, the issue of the banking employees is assuming a national proportion and in an economy which clocks around 6 to 8 per cent annual inflation, there is no justification of a 2 per cent salary increment for all bankers as a constant for half a decade next.
Bank pensioners' plight
There is also the issue of 5 lakh plus Bank Pensioners who are reeling under financial distress due to non-revision of their pensions ever since it was introduced way back on January 1, 1986. Bank Pension Scheme at the same rate, was formulated on the basis of Central Govt Pension Rules in 1993. As the facts stand, Central Pension Rules underwent changes as per the Central Pay Commission Recommendations of 1996, 2006 & 2016. Bank employees wages & service conditions (barring Pension) were too revised in 1987, 2002, 2007, 2012 and it has further become due, talks for which are going on. Bank Pensioners were ignored and unheard by UPA govt, as had happened with Forces' demand of OROP, and the same continues till date under NDA government.
Interestingly, the Bank Pension Payments do not have any bearing on Banks expenses. Pension is paid out of income generated from Pension Funds, created and contributed by bank employees and officers, while in job. These Funds are managed by Banks through Trusts. The Pension Fund is invested in tax-free bonds and govt securities. Pension Fund of all Banks is generating huge income and leaving huge surpluses after paying Pension. So, Pension Fund itself is so robust, but Bank Management is just sitting in the Pension Fund in denial mode.
(The author is School Head, School of Media, Pearl Academy, Delhi and Mumbai, and former Dean of Symbiosis and Amity Universities. The views expressed are strictly personal)