Banking services took a huge hit following a two-day nationwide strike called by over 10 lakh bank employees. There are about 85,000 branches of 21 public sector banks across the country having business share of about 70 per cent that remained shut. The shutdown has affected millions of people including traders, businessmen, students and housewives. ATMs stopped working. The usually dysfunctional ATMs of public sector banks remained almost dead, putting additional pressure on the private sector ATMs in the vicinity leading some of them to crash. The two-day stir has affected cash withdrawals, deposits and cheque clearances at state-run lenders. Operations like deposits, FD renewals, government treasury operations and money market operations have taken a beating. Although private sector banks continued their operations during these two days, an unusual rush in their branches forced many of them to down their shutters. The pain has been all the more telling given that the strike has been called on the last two days of the month coinciding with the payday of a large section of salaried class. In fact, it has been so designed as to hit the common people most. As the strike had been notified earlier, employers, if they had so desired, could have released their staff salaries before the strike that they did not do.
The United Federation of Bank Unions, an umbrella body of nine bank unions, led the stir with support from smaller outfits. The employees are upset with their managements (read the government) for their decision to affect a 2 per cent wage hike. According to reports, bank employees have enthusiastically supported the strike, thereby making it a total success. To be fair to the employees, a 2 per cent wage hike at a time when the inflation has been hovering over 5 per cent and petrol costs about Rs 80 per litre is just too meagre. However, the Indian Banking Association (IBA), the body of bank managements, on its part, has justified the small rise citing the rising pile of non-performing assets in their books and a series of frauds that has left the industry in the doldrums over the past few years. There is logic in their contention that the banking sector as a whole is bleeding. The sector has been beset by chronic problems. The quantum of NPAs of PSU banks is rising. Although introduction of the Insolvency and Bankruptcy Code (IBC) is a welcome move and promising, the new law is riddled with multiple legal and logistical challenges. Earlier this week, a recent RBI audit unearthed that bad loans at the country’s five biggest state-run banks are about Rs 47,000 crore more than what the lenders had assessed. Considering that 50 per cent of the country’s 22 state-run banks are already under the RBI’s strict prompt corrective action (PCA) programme that limits lending and other expansion projects, disclosure of such a humungous amount of hidden debts is a massive setback to the already ailing sector. This puts a further strain on the stressed assets quality of banks.
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Considering that the government is the largest stakeholder of the PSU banks, it owes it to the tax-payer to tidy up the mess in the system. The huge bad debts are certainly not the making of small and subordinate officers of banks, but the big fish. But, as direct beneficiaries of the system, it is only in their interest to ensure that the sector survives and is reared back to pink of health. They must look beyond their personal aggrandisements and be willing to share this challenge. All said and done, managements, on their part, need to ensure that the morale of the employees remains high. Unless the staff salaries and other benefits are kept competitive, there may be a fall in their motivational level encouraging exodus of talent from the system, eventually affecting the health of the sector. Thus, the approach should be multi-dimensional and a consensual one. Strikes do not help anybody.
