Gain, or Loss

Nityananda Ghosh

Banking services were totally hit on 18th December, 2013 as employees of the state owned banks went on a one-day strike to press their demands of wage revision and to stop the banking sector reforms. However, the services of private sector banks like ICICI Bank, HDFC Bank among others were less affected as their employees did not take part whole-heartedly in the strike. At the time of writing [January 10, 2014] the unions called off their proposed 2-day strike on January 20-21, 2014, following an assurance by the management that wage-revision demand would be considered favourably.

The strike was called by the United Forum of Bank Unions (UFBU) which consists of nine bank Unions of officers and employees. In the state of West Bengal the banking services were totally disrupted, even the ATMs counters also remained closed. The cash transactions, cheque clearance, foreign-exchange dealings were impacted at the PSU banks. While claiming the strike as total, UFBU leadership said, " Even though Unions had given notice for the strike one month ago, the Government and Indian Banks Association (IBA) did not take necessary steps to resolve the demands. Hence, the strike had been forced on us".

ATMs Chaos
Actually since the last November to 18th of December, 2013 the several bank unions, particularly the AIBEA (All India Bank Employees Association) undertook a series of mass protest to press their charter of demands. They were concerned about the attack on a Bangalore based ATMS counter. AIBEA took out a procession (Mahamichil) from Shyam-bazar to Subodh Mullick Square, Kolkata in the November last demanding posting of security guards at all ATMS in West Bengal. There are 4,000 ATMS in WB and 2,500 ATMs in Kolkata alone but less than 50% guards were recruited, said Rajan Nagar, General Secretary BPBEA, President AIBEA, in an exclusive interview with this correspondent. They have already submitted a memorandum to the Chief Minister, Government of West Bengal, requesting her to ask Bank managements to post proper security guards immediately at all ATMs in the state for the safety and security of the customers. Also they have urged Bank management, Government of West Bengal and Police to take effective measures for the safety and security of customers and not to allow unguarded ATMs in the state. It is a matter of concern that banks like ICICI Bank, Yes Bank, Punjab National Bank, State Bank of India etc. have withdrawn the security guards from their ATMs despite the protest launched by Bank Unions.

One should have astonished that ATMs guards receive their salaries without pay-slips. Be it a state owned bank or a private sector bank. When interacted with a private sector ATMs guard of central Calcutta near Sealdah, he refused to tell his name but he corroborated the above fact. At present a few multipurpose ATMs counters have been opened specially within the metro-rail stations. Union leaders are against this type of multipurpose ATMs counters as they feel that without proper safety these are meaningless. They stressed more on safety and security of the customers. Mr Rajan Nagar and another leader Kamal Bhattacharjee, AIBEA, further asserted that their union was very much worried about the safety and security of the customers and for this they would intensify their movements to fill up the security posts at all the ATMs.

Bad Loans
In the near future the Banking system across the country will face a serious threat due to staggering bad loans accumulated over the decades. Earlier, it was sought to be explained that bad loans in Banks increased due to priority sector and agricultural loans. Later it was sought to be diluted as a system generated Non-Perfoming Assets (NPAs). At present it is becoming clear that it is a systematic loot of public money as claimed by the AIBEA leaders. According to AIBEA leadership, "Even the Government has confessed that the big and rich borrowers are the real culprits. The amount of write-offs towards bad loans is also on the rise in all the Banks. According to RBI, the bad loans worth Rs 1,41,295 crore were written off during the period 2007 to 2013. And most of those write-offs were in favour of the big defaulters and corporate borrowers." From the Table-1 one can guage the facts and figures.

From the table it is also clear how a systematic loot is done with the public money. The corporate houses are responsible for holding 35% of the bad loans. If this systematic loot is going on at this pace the banking system in India will definitely collapse.

Reforms for whom?
The United Forum for Banking Unions (UFBU) is continually protesting against the Banking Sector Reforms by organising periodic mass demonstrations including strikes. The UFBU apprehends that in the name of Banking Sector Reforms, the Central Government is taking various steps and measures to completely de-regulate the Banking Business. Banks in India at present have nearly Rs 75 lac crore as Deposits representing the hard earned savings of the people of the country. The UFBU is for defined regulation which Public Sector is doing and which saved India's Banking system from the Global Crisis. Due to adoption of de-regulation and liberal banking policies, many banks in many countries including USA and Europe have collapsed. Is India heading towards collapse in the banking industry in the name of reforms?

The RBI has recently announced in its discussion paper that the Government's Equity Capital in Banks can be reduced to less than 51% which means nothing but privatisation of India's public sector banks. The discussion paper also proposes that the Bank may resort to merger of Banks to become International Banks. According to the recent guidelines issued by RBI, it has been further proposed to offer Foreign Banks, near national status and even a scope to take over India's Domestic Banks. It is also a fact that already the foreign capital and investments in Indian Banks have been increased substantially and now the move to allow the Foreign Banks to take over nationalised Banks has started. The merger has its own adverse implications to the detriment of the employees and officers working in the Banks.

Wage Revision
Bank employees and officers are demanding immediate wage revision. But why? Wages and service conditions are governed by the industry-level bipartite settlement signed between Indian Banks Association (IBA) and the trade unions of bank employees and officers. As Public Sector Banks, Private Sector Banks and Foreign Banks have given their mandate to IBA, they are party to the settlements and hence are covered by the same. The last bipartite settlements (i.e 9th) on pay revision and service conditions was signed on 27.4.2010 covering the period from 1.11.2007 to 31.10.2012. So, it came to an end on 31.10.2012 and consequently, revision of wages and other service conditions have become due as from 1-11-2012.

As a matter of fact, UFBU had already submitted a common set of demands for the employees and officers to the IBA on 30.10.2012. As per request of UFBU to IBA to adopt a time-bound programme to hold the negotiations on the demands to expedite the settlement as early as possible the formal negotiations started in February, 2013. Five rounds of discussions have already taken place but effective decision has yet to come out. In the ensuing 10th bipartite settlement IBA has recommended only 5% pay hike whereas it was 17.5% in the previous 9th settlement.

In the meantime service conditions of the employees and officers have been worst affected due to retirement of the staff. The decrease in work force (i.e staff shortage) led to the many-fold increase of work-load for existing employees. To add insult to the injury, in between 1991-2012 Bank offices and branches have been increased from 60,570 to 1,01,201 and only in Public Sector Banks more than 56,090 permanent posts lie vacant. The country-wide Banking service may collapse unless fresh recruitment takes place immediately.

The Banking authority is suggesting only five percent pay hike on the pretext that Banks are incurring losses and extra money is being spent for pension holders. The statement issued by the IBA does not corroborate from the facts as shown in the Table-2, where it has been shown that during the last five years (2008-2013) the published net profit touches Rs 2,18,627 crore.

According to RBI, the banks have added Rs 4,94,836 crore to their bad loans between 2007 to 2013. The provision for bad loans is taking a heavy toll on the profits and the net profits which are dwindling. It appears that Banks are earning profits only to donate the same to hide the corporate delinquency. Bad Loans in Banks are being suppressed and depressed by showing reduced amounts of bad loans through provisioning, write-offs, concessions, waivers, one-time settlements, compromise proposals etc. Of late, Banks are resorting to heavy restructuring of bad loans to critically show them as performing loans.

Going by RBI data, the total bad loan restructured as good loan has exceeded Rs 3,25,000 crore of which loan restructured in favour of corporate borrowers is Rs 2,70,000 crore. So, who will bell the cat and take action to recover these bad loans?

To address this problem UFBU is raising the following demands :
l    Publish the list of Bank loan Defaulters of Rs one crore and above.
l    Make willful default bank loan a criminal offence.
l    Order investigation to probe nexus and collusion.
l    Amend Recovering Laws to speed up recovery of bad loans.
l    Take stringent measures to recover bad loans.
l    Do not incentivise corporate delinquency.
The hard reality is that the Union Government otherwise hell bent on 'reforms', is not listening. Nor does the IBA see reason in Bank Unions’ demands.

                SECTORS                                                                                         Amount

Profits transferred and adjusted for provisions

Bad loans written off in the last 7 years           1,40,000

Year                                          Gross Profit              Provisions                Published
Before Provisions       Made for Bad                  Net

2008–2013       3,58,893 1,40,266                2,18,627

Frontier
Vol. 46, No. 30, Feb 2 - 8, 2014

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