THE campaign for the privatisation of banks by corporate interests has found some support because of the general perception that the productivity of bank employees is low, that they earn far more than what they deserve, and that serious problems in the b anking industry, such as the high levels of Non-Performing Assets (NPA) of public sector banks, are the making of bank staff and their unions.
In fact, productivity in banks, possibly defined in terms of earnings, profits or other such parameters per employee, is not just a function of the bank employees' "efficiency". Whatever the employees do, banks are made or broken basically by the investm ent decisions of a few top-level officials. Essentially banks make their earnings from the spread between the cost of the funds they mobilise and the return they earn on advances to clients.
If decisions on loans are made by a select few, and, particularly, if they are influenced by political or corporate pressures, the productivity of workers or officers can play hardly any role in determining a bank's fortunes. Leaders of both the All Indi a bank Employees Association (AIBEA) and the Bank Employees Federation of India (BEFI) told Frontline that the unions were willing to accept that the employees and officers had a role in making banks friendly and accessible to clients. But this, t hey said, was different from saying that they should pay with their jobs for the way banks had been wrecked by predatory business interests.
Tarakeswar Chakraborti, general secretary of the AIBEA, says that Indian banking regulations are extremely lax to corporate entities. "The law," he says, "allows entrepreneurs, whose own stakes in the companies they float are low, to draw advances from p ublic financial institutions and banks and then bleed the companies to death before opting for other businesses, where they repeat the same process."
The unions have suggested several measures to check this practice. These include, the publication of the list of defaulters who have borrowed over Rs.10 lakhs, making wilful defaulting a criminal offence, enacting stringent legislation to enable attachme nt of the assets of defaulting companies and their directors, and barring defaulting companies from selling their property and taking loans from any other bank.
"Bank laws," says Santi Ranjan Sengupta, general secretary of the All India Bank Officers' Confederation (AIBOC), "date back to 1948 and companies take advantage of this." He said that legal reforms were "desperately needed".
Sengupta said that 78 per cent of the deposits in banks were from the general public, 6 per cent were industrial deposits, and the remaining 16 per cent were from others, including financial institutions. "When private sector houses default," says Sengup ta, "public money is looted. This should be made a criminal offence."
The bank unions are divided on the ongoing wage negotiations with the Indian Banks Association (IBA), the forum of bankers. However, Santhi Bardhan, general secretary of the BEFI, told Frontline that the BEFI was exploring the possibility of launc hing joint struggles with other unions to defend jobs and also to resist the privatisation of public sector banks. Some unions have already chalked out an agitation programme. On February 8, 2000, a Parliament march by 70,000 bank employees from all over the country was planned, he said. There are also moves to organise rallies, conventions and other forms of agitation all over the country.
"A banking company," says Chakraborti, "is very different from other undertakings. It deals with the deposits of the common people. Who can be the best trustee for the masses other than the Government? Besides, the record of private sector banks speaks f or itself. In the last 13 years, as many as 16 private sector banks have failed."
In the past, public sector banks have absorbed the losses suffered by private banks. In 1986, Parur Central Bank Limited was merged with the Bank of India, the Bank of Cochin was merged with the State Bank of India, Laxmi Commercial Bank was merged with Canara Bank, and Hindustan Commercial Bank was merged with Punjab National Bank. In 1987, the Bank of Tamil Nadu was merged with the Indian Overseas Bank and Bank of Tanjore Limited was merged with Indian Bank. In 1988, the United Industrial Bank Limited was merged with Allahabad Bank. In 1989, Purbanchal Bank was merged with Central Bank. In 1996, Kasinath Seth Bank was merged with the SBI. In 1997, Traders Bank Limited was merged with Oriental Bank of Commerce. In 1998, Punjab Cooperative Bank was mer ged with Bank of Baroda. In 1999, Bareilly Banking Corporation was merged with the SBI and most recently, in December 1999, the Sikkim Bank was merged with Union Bank of India.
Biswajeet Chowdhuri, Chairman of the Union Bank of India (UBI), feels that rather than privatisation, private investment in the banking sector, in which the majority stake still remains with the Government, would be a better idea.
The unions also condemned the Central Government's suggestion of a wage freeze. "We are prepared to accept staggered increments, but we strongly oppose a wage freeze," Chakraborti said. According to him, the performance of a bank is not dependent on the bank alone. "Banks are mirrors of the economy. Banks like UBI and UCO Bank have large branch networks in the eastern region. However, this region is economically backward. In West Bengal 60,000 factories have been closed over the years, and insurgency ma kes operations in the northeastern region very difficult," said Chakraborti.
