The government has asked 10 public sector banks (PSB) to curtail employee benefits, including industry-standard pay hikes, if these want to receive any capital.The Centre wants these banks to sign a memorandum of understanding (MoU) with the employees’ unions to get a commitment on this. If the unions agree, benefits such as leave travel concessions and perks could go for a few years till the banks returned to health.
All three Kolkata-based banks — United Bank of India, UCO Bank and Allahabad Bank — have got this diktat. The letter has also gone to Indian Overseas Bank, Vijaya Bank, Bank of India, Central Bank of India, Andhra Bank, Bank of Maharashtra and Dena Bank, sources said.
These banks had asked for capital from the government, some as little as Rs 500 crore. But the government is acting tough, as these have a huge bad-asset problem and their profits are dwindling.According to sources, the letter said capital allocation would be linked with quarterly measurable milestones on which all related parties — banks’ board of directors, management and employees — must commit.
Support in the form of capital would require a tripartite MoU between the government, the PSB concerned and its employees. The MoU would be a commitment to an agreement for a time-bound plan, starting with the financial year 2017-18. It would be monitored quarterly. Temporary restructuring of employee benefits would be done only based on need. Any reduction or suspension in benefits could be reversed if the bank concerned successfully managed turnaround operations, said sources.
Senior bankers in some of these institutions confirmed they had received such a letter. A senior executive of a bank said the purpose of the proposed MoU was to have employees on board. “This is a commitment and not a legal provision to put blame on and basis for action against employees,” he added.
Sources said SBI Capital Markets, the investment banking arm of the State Bank of India (SBI), has been asked to advise on the terms of the MoU.According to a senior union leader, they would explore the option of going on strikes if they were not satisfied with the terms of the MoU.
C H Venkatachalam, general secretary, All India Bank Employees’ Association, said employees were ready to cooperate for the effective turnaround of banks. However, unions and employees would not tolerate a vendetta or harassment. Banks have to be empowered to ensure effective recovery from defaulters, especially corporate borrowers, through legal means.
“The government wants the banks to sign the MoU with the unions to restrict economic benefits of employees. This is probably the government’s way of saying the employees of these banks deserve to be punished,” said a source. Bank unions might find hurdles to their agitation plans. The P J Nayak committee has already suggested privatisation of PSBs. Union Finance Minister Arun Jaitley has expressed a desire to start privatisation with IDBI Bank. Besides, the government in July 2016 said it would capitalise only 13 banks, out of the 19 it owned, based on performance.
Bank unions were in a spot after the government gave a go-ahead to SBI to merge with its associate banks. Such an MoU was not unprecedented. In 1998-99, the M S Verma committee report had suggested that banks with a return on assets of less than one per cent should be liquidated. Affected banks — Indian Overseas Bank, United Bank of India and Indian Bank — had to sign such an agreement with the unions. These banks had returned to health in three years. Then finance minister P Chidambaram used to preside over the board meetings of these banks and employee benefits were significantly curtailed.
The government is trying the same trick this time and the unions might have to oblige to save the banks from privatisation, sources said.
.jpeg)
this is going to happen because of only top management of these banks...top management never support their staff...they only interested in own development...
ReplyDeleteYou are Right sir...
DeleteThe management always thinks as to how to get back the NPA and for that they can go to any level, that is even writing off the loan. The top management have never thought about the honest borrowers who repay the loan in time or before time. They do not even think of giving then any benefit like last installment need not be paid or honouring them for their prompt repayment of loan etc. Here every body is ready to give lots and lots of benefits to the borrowers who have not paid the amount they borrowed from the Bank. Then a big shot can get any loan any time. The real borrower who wants a loan will have to run for months or even a year from pillar to post to get his loan sanctioned. Another problem is that all the banks have been given lots of work which is not concerned with banking, like TDS on deposits ? Why should bankers act like taxmen ? Has the Income Tax Department been closed ? In this age of digitization why can't the IT do their own work and leave the bankers to do their own.
ReplyDeletecorrect
DeleteI do not say that staff is not responsible but how can a staff act on his/her own without permission from the bosses. Then the plans, the rate of interests, the action to be taken if a borrower does not repay the loan or whom should be given the loan etc are policy maters which are made by the top brass with the guidance of the Central Government and the Reserve Bank of India. You take the example of Dena Bank, the rate of interest in the Bank for borrowers have always been more than the rate of interest of other nationalised banks in India. Even the staff did not take loan from Dena Bank. Gold loan rate is much higher than the gold loan rate of Canara Bank and I could not persuade a staff member from taking loan from Dena Bank. Why should the staff be penalised for it. There might be some persons in Banks who might be going out of the way to accommodate their friends, they should be punished and not the whole lot. Has the Government given any power in the hands of staff to decide on any matter relating to Banking of the particular Bank ? No !!Then why should the staff be punished at one go. I request the authorities who decide on the plans, the rules for write-off of loans etc., to delve into the issues properly and then come to a conclusion as to what will be best for the Bank or banking industry of India instead of penalising the staff.
ReplyDeleteDoes it mean that entire staff of these three/ four banks is inefficient as compared to other banks.. fair analysis of the situation reveals that the top mgt, n its ruining policies has been the key cause of this pathetic situation of banks
ReplyDelete