The rot within: The many woes of SBI

State Bank of India, India’s largest bank, is plagued with a host of problems, mostly relating to wages, perks and pensions, and the latest addition to that list is management high-handedness in HR issues, which is bringing down staff morale.

Published : Mar 17, 2022 06:00 IST

At a protest  against SBI’s new pension scheme, in Madurai on November 15, 2019.

At a protest against SBI’s new pension scheme, in Madurai on November 15, 2019.

State Bank of India (SBI), India’s largest bank and the bank on which the country banks, is apparently in dire straits. Not only does the bank have to bear the burden of the government’s policies such as Jan Dhan Yojana and loan melas and waivers, which have resulted in mounting non-performing assets (NPAs), its employees have to suffer the management’s arbitrary decisions, which are causing severe stress and loss of individual dignity and creating discontent/disharmony among the staff, especially the younger generation, which is vehemently resisting the disturbance in work-life balance.

The problem has acquired such huge proportions that a senior human resource (HR) executive of the bank has been forced to write to all local head offices, expressing grave concern at the violation of the basic principles of HR policies and demanding to know whether the regions have initiated any measures to ameliorate the situation.

CGM letter

In a letter to local head offices on February 5, 2022, Ranjan Gupta, the bank’s Chief General Manager (HR), said: “The guiding principles behind any HR initiative should be to align the expectations of the organisation and the aspirations of the workforce. While achievement of business goals is of paramount importance, it is equally important to establish a healthy and happy workforce to achieve these goals.”

He further said: “However, of late, the actions and practices followed at certain regions are contradictory to the expectation of the bank. In gross violation of bank’s directives, certain regions have carried out functions with utter disregard to individual dignity.”

Illustrating his observations, the CGM (HR) gave the following examples:

1) Permission denied arbitrarily to those eligible for work from home—a pregnant staffer was not allowed to work from home on the flimsy grounds that she had not submitted her application in time.

2) Calling officers to work on Sundays/holidays routinely without any office order and without the mandatory payment to them for working extra hours.

3) Lack of empathy while carrying out transfers/postings on compassionate grounds: a young officer who requested for transfer from one module to another so that he could take care of his aging and ailing parents was transferred to a branch 200 kilometres from his parents’ residence.

4) Arbitrarily denying allotment of official guest house/holiday homes, which was actually a matter of right.

5) False closure of staff grievances without actually resolving the matter.

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The CGM also said that what was even more shocking was the impunity with which senior executives took such decisions, giving the impression that their actions were beyond the control of any authority in the bank. He said: “You may please appreciate that inactions/wrongful action on the part of HR functionaries/controllers results in avoidable inconvenience to the staff, adversely affecting their work-life balance. This, in turn, creates hindrances in the bank’s journey towards achieving the targeted goals and priorities.”

In the letter, of which Frontline has a copy, the CGM directed all controllers to review the situation in their regions and reply by February 15, 2022, informing him of the initiatives taken to improve matters.

Low morale

Senior banking officials who spoke to Frontline admitted that morale among bank staff was at an all-time low. An official said: “The situation is bad. It adversely impacts performance and also results in bad staff behaviour amongst themselves and with customers. Grumpy bank employees shooing away customers, treating them with contempt, remaining indifferent to even matters of urgency are all outcomes of their own frustration and stress.”

The low morale among employees is of serious concern since SBI, which plays a key role in moving the Indian economy, is the fifth largest employer in the country, employing some 2,50,000 employees. It is the largest bank in India, with 23 per cent market share in assets and 25 per cent share of the total loans and deposits market. Incidentally, it is also the 43rd largest bank in the world.

SBI has been in existence since 1806, when it was called Bank of Calcutta. It then became Imperial Bank of India in 1921 and was finally taken over by the government on July 1, 1955, and renamed State Bank of India.

Ironically, SBI employees, who were entitled to an assured pension even during the colonial era, are no longer assured of even getting their pension, which is often dubbed as an inviolable entitlement. The issue of pension, in fact, has become a greater source of worry and consternation than other HR issues such as wages, perks and leave.

The issue of pension, affecting over one lakh retired SBI employees, has now reached the Supreme Court through a special leave petition (SLP). The SBI Staff Union in Kerala circle filed the SLP challenging the unilateral shift to a new pension scheme in SBI with effect from August 1, 2010, claiming that it was in violation of the SBI Act and also various Industrial Dispute Acts.

According to this SLP, which was filed after the Kerala High Court rejected the case, their pension was a fundamental right and non-contributory in nature. But in August 2010, the government introduced the new scheme with retrospective effect, making it a contributory pension scheme from a non-contributory one earlier.

The new regime further pegged the pension fund to market forces, which means that the fund would be invested in the stock market. After retirement, the employee would get a pension amount (which is a part of his or her own contribution) that would be dictated by the market. If the market went down, the pension amount would be low, and if it went up, the pension amount would be high.

What if the market crashed? The government has steadfastly refused to discuss the possibility.

The SLP was filed in February last year and the apex court has now issued notices to the government and the bank in this regard. According to the SLP, the change in the pension scheme was violative of Section 50 of the SBI Act, which states that the bank’s central board is obliged to consult the Reserve Bank of India (RBI) prior to formulating any regulation.

In the present case, the SLP said, while the regulation was modified on September 15, 2014, it was implemented with retrospective effect from August 1, 2010. This, despite the RBI specifically advising the bank board twice, first on February 15, 2012, and then again on May 18, 2012, that any modification in regulations affecting pension entitlements cannot be done with retrospective effect.

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Further, the SLP said, the modification also violated Section 50 (4) of the SBI Act, which mandates that any modification in regulations made by the bank’s central board is to be forwarded to the Central government, which in turn shall ensure that a copy of the same is tabled in Parliament for a period of 30 days in either one session or two sessions.

If Parliament amends or annuls any such modification, the bank will have to comply with it. The SLP categorically stated that Parliament was bypassed for this modification. It further argued that the modification in the regulations was also violative of Articles 14 and 21 of the Constitution as well as Sections 9(A) and 18 of the Industrial Disputes Act.

Raja Kurup, former general secretary of SBI Staff Union, Kerala circle, said: “This change in pension regime from non-contributory to contributory scheme is not only unconstitutional, it violates the SBI Act and the Industrial Disputes Act, too, hence we hope the Supreme Court will set it aside.”

Another pension-related issue rankling lakhs of SBI pensioners is the updation of pension, meaning that whenever there is a wage revision, the pension should also be revised, as is done in the case of Central government employees. But this issue has also been pending in various high courts since 2006.

A senior SBI executive said: “Fiddling with pension is a moral crime. This is something which employees get as an entitlement after spending their lifetime in an institution. To deny us this basic privilege is sacrilegious.”

Thomas D. Franco, a senior functionary of SBI officers’ Association, said: “We only want that we should get what is ours by law. Our pension is not a favour, it is our right which we earn. Now, we are no longer even sure of an assured sum as pension. With no other social security system available, where can a retired person go?”

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