United protest

Bank employees strike work over issues of economic policy.

THIRTEEN lakh public sector bank employees, including officers, went on strike on August 28 and 29, virtually paralysing the country's banking system. This time round, their demands did not centre on monetary incentives or pay increases but on issues of economic policy. The strike resulted in the loss of an estimated seven million mandays and thousands of crores of rupees.

The immediate provocation for the strike was the issue of licences in January 1997 to three parties to set up local area banks, following up on the Finance Minister's announcement in his July 1996 Budget speech of the Government's decision to open up the field to the private sector. The Prakash Pai family in Karnataka and Alpic Finance in Mumbai are among the licensees.

Tarakeswar Chakraborti, secretary-general of the All India Bank Employees' Association (AIBEA), told Frontline that the United Forum of Bank Unions (UFBU), which comprises nine unions, wrote to the Finance Minister on March 5 to protest against the policy of inviting the private sector to rural banking. They later wrote to the Reserve Bank of India (RBI) and sent representations seeking a dialogue with the Government on the issue. They met State Chief Ministers too. After six months, the Union Government called a meeting on August 25. Chakraborti said: "We do agree that strikes cause inconvenience to customers but the Government does not respond to our demand for negotiations and dialogue and hence we have been forced to take this extreme step."

According to Chakraborti, allowing the private sector to set up banks in the rural areas is an invitation to disaster. He believes that private sector banks will mop up rural funds in a deregulated interest regime and these resources will then be diverted to non-productive but profit-making activities such as trading and speculation. He said: "Rural money will now be diverted to the share market to the detriment of the farming community and this will jeopardise our self-sufficiency in food." He believes that licensing private rural banks amounts to backdoor implementation of the Narasimham Committee recommendation that subsidised bank credit to the rural sector should not exceed 10 per cent of total credit.

Another demand relates to the implementation of the October 29, 1993 agreement under the framework of the Industrial Disputes Act under which the Indian Banks Association (IBA) was to introduce a pension scheme for bank employees in lieu of employers' contributory provident fund. Tarakeswar Chakraborti says: "Even after four years it has not been implemented in any of the public sector banks with whom they signed the agreement."

IBA chief executive and secretary M.N. Dandekar disagrees. He says: "The implementation of the scheme for private sector banks alone has been delayed because we are yet to finalise the mode of disbursement. It is already in force in all public sector banks."

Terming the strike unwarranted and illegal, Dandekar claimed that 15 to 20 per cent of the employees in many banks reported for duty on both days. He said that the issues under contention were minor ones and these could be resolved through dialogue.

One major irritant is the clause in the pension settlement that declares all strikes by bank staff illegal, entailing the forfeiture of past service for the purpose of computing pensions. Chakraborti says: "We have taken the opinion of a Supreme Court Judge on the matter... it is unconstitutional. The IBA wrote to the Government in June suggesting that this clause be scrapped, but no action has been taken."

Dandekar insists that the strike is illegal, but would not say what penalties it would involve for the staff, apart from loss of wages for the days on which they struck work. He says: "We are prepared to come to the table for a dialogue to resolve outstanding issues. But the unions should desist from issuing threats and resorting to strikes and other illegal action."

The unions also resent the freeze in recruitment to banks for the last eight years. They believe that recruitment should be need-based and the decision should be left to individual banks rather than being dictated by the Government. Another demand relates to the resumption of appointments on compassionate grounds to relatives of employees who die while still in employment.

The unions also want non-banking finance companies to be stopped from accepting public deposits. Chakraborti says that they have already cornered huge resources that would otherwise have gone to public sector banks.

Public reaction to the strike has been unsympathetic. The UFBU will meet in Hyderabad on September 4 to discuss the future course of action.

The RBI Employees' Association joined the strike. According to its president T.K. Ghosh, RBI employees did so to demand the restoration of the supervisory functions of the bank, which, they believe, would be diluted by the proposal to delegate branch-level inspection hitherto conducted by the RBI to the respective banks.