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AFTER 100 DAYS OF NEW GOVERNMENT

NO KHUSHI, STILL GHAM


FOR BANK EMPLOYEES
By
S.SRINIVASAN
Retired Bank Unionist
OUR STAND OF 25% HIKE IS JUST AND SACROSANCT! PART VI!
Justification VI: Our Demand is reasonable and achievable
The concept of Public Sector., it is by no co!!on knoled"e as pro!oted
in India at the behest of the captains of Indian Pri#ate Sector as early as in
$%&&. Pri#ate sector Industrialists includin" 'R( Tata ere in#ol#ed in draftin"
the $%&&)Bo!bay Plan* detailin" the need for creatin" a Public Sector. Pri#ate
Sector industries needed cheap infrastructure like poer, railays and roads.
They needed subsidi+ed ra !aterials. They ere neither illin" nor had the
financial resources of such !assi#e scales to in#est in lon")"estation periods
The Indian Public Sector, hoe#er, alon" ith all that cheap econo!ic
infrastructure also "enerated a de!o"raphic re#olution not unlike in ersthile
So#iet Union after the $%$, re#olution. -ith secure .obs ca!e se#eral
"enerations of children of free India / ho "re up in relati#e affluence / ith
sturdy health, steady ho!es and educational opportunities unknon before
creatin" the ne orld renoned technical !anpoer of India / the third
lar"est in the orld. Thus the 0reat !iddle class of India hich included bank
e!ployees beca!e an International force to reckon ith.
They ha#e transfor!ed a backard country into a !odern nation threatenin" to
upset the he"e!onic a!bitions of super poers and i!perialist forces.
Pitchin" for consolidation in the bankin" industry, for!er 1inance 2inister P
3hida!bara! said India ould need one or to "lobal)si+e banks as it !arches
ahead to beco!e the orld4s third lar"est econo!y at the Bancon)5012
recently at Pune on 24 November 2014!"indin# ne$ business models $ill
inevitably lead to some consolidation %e must create at least 2 or &
$orld si'e ban(s )hina has done it 6-e should not fear consolidation. I
kno there is pride and identity, but ulti!ately so!e consolidation ould ha#e
$
to take place in the bankin" syste! in this country,6 he said.7 And if India
ants to be ... and it ill be the third lar"est econo!y in the orld ... e !ust
also ha#e one or to orld si+e banks and so!e consolidation is ine#itable,6 he
said at Bancon)58$5 !eet , disre"ardin" historical facts and co!parison on the
other i!portant factors hich led to nationali+ation of banks in china such
pre#alent a"es in bankin" industry in china .Reports confir! that The salaries
and bonuses e9penditure of bank e!ployees in china increased fro! $%.%
billion to :.555 billion ;uan, an increase of <5=beteen 5$88).The hi"h
profits and hi"h salaries on offer at 3hinese banks ha#e been brou"ht into
>uestion as the country4s econo!y be"ins to slo, ith senior e9ecuti#es no
earnin" as !uch as ?8 ti!es the salary of a "eneral e!ployee.
-hen it co!es to historical facts it should be understood contrary to popular
perceptions, *nli(e )hina only on July 1+, 1+-+, .22 years after
inde/endence0 fourteen ma1or ban(s of the country $ere nationali'ed
des/ite 2an(in# determinin# the bac(bone of the economy
2an( Nationalisation 3
The I!perial Bank !erely chan"ed its na!e to the State Bank of India @SBIA by
the State Bank of India Act $%B5. In $%B: the Palai 3entral bank collapsed. A
si!ilar fate faced !ost of the banks run by the ersthile !ahara.as, due to the
lar"e funds siphoned off. To sa#e these banks fro! default and to bail out the
!ahara.as, $8 banks belon"in" to the princely state ere taken o#er by SBI in
$%B< / these included the State Bank of Patiala, Saurashtra, Bikaner, 'aipur,
Indore, Baroda, 2ysore, Cyderabad, Tra#ancore and a nu!ber of s!aller ones
like San"li, !anipur, 2ayurban., etc.
In $%B% Palai 3entral Bank Dtd, Eerala hich had reportedly financed some
assembly / parliament elections went into liquidation. It as folloed by
failure of Daksh!i Bank Dtd Akola, in the ne9t year .The list of such banks
before Nationali+ation ill be to bi" too be na!ed here.
In the late $%B8s the "o#ern!ent appointed the 2ahalanobis 3o!!ittee to look
into the precarious conditions of the pri#ate Banks. The 2ahalanobis Report,
reco!!ended besides handin" out the standard for!ulae to reduce flab, trim
si'e, etc, it su##ested the amal#amation of the less /rofit ma(in# ban(s
$ith the others. This resulted in the nu!ber of banks bein" reduced from -04
in 1+405 to 42& in 1+4-5 to 2+2 in 1+-1, to 102 in 1+-- and on the eve of
nationalisaion in 1+-+, to 1ust 6-
5
In the late $%B8s the "o#ern!ent appointed the 2ahalanobis 3o!!ittee to look
into the precarious conditions of the pri#ate Banks. The 2ahalanobs Report,
reco!!ended besides handin" out the standard for!ulae to reduce flab, trim
si'e, etc, it su##ested the amal#amation of the less /rofit ma(in# ban(s
$ith the others. This resulted in the nu!ber of banks bein" reduced from -04
in 1+405 to 42& in 1+4-5 to 2+2 in 1+-1, to 102 in 1+-- and on the eve of
nationalisaion in 1+-+, to 1ust 6-
2ost of these banks that had e9isted ere the offshoots of local
landlordsF2ahara.as or bi" traders and !oneylenders ho sou"ht to e9tend the
scope of their financial acti#ities. 2ost ere in a state of collapse, due to
irre"ularities and the take)o#ers by the SBI and !er"ers sa#ed the! fro!
default of depositor*s !onies. Besides, in the ne scenario, after $%&,, the bi"
bour"eoisie ho beca!e the do!inatin" partner in the rulin" class alliance
could not allo the fiscal anarchy profli"acy of the !oneylender F landlord F
trader co!bine and had to brin" syste! into finance and bankin" to tap
resources to the !a9i!u!. 1olloin" the reco!!endations of the Rural
Bankin" Gn>uiry 3o!!ittee, the then I!perial Bank of India as asked to
open $$& ne branches in rural and se!i)urban areas ithin a period of B years
fro! $.,.$%B$ to :8.B.$%BB. Hnly <: branches ere opened by it. 3redit
disbursed to the rural areas as practically nil.

In the aforesaid back"round and on the reco!!endations of All India Rural
3redit Sur#ey 3o!!ittee, State Bank of India Act as enacted in $%BB,
transferrin" the I!perial Bank of India to State Bank of India. Reser#e Bank of
India contributed nearly %,= of the e>uity of SBI. -ithin a period of B years
fro! its inception, SBI opened &$B branches as a"ainst a tar"et of &88 branches
"i#en to it. Pursuant to the sa!e ob.ecti#e SBI ISubsidiary BanksJ Act as
passed in $%B%, hich enabled the SBI to take o#er associate banks as its
subsidiaries. Thus, the period of $%BB to $%B% !arked the be"innin" of public
sector bankin".

7he aforesaid ste/s /rovided a filli/ to /rovisions of credit to rural sector
and also the e8/ansion of ban( branches 7his forced the 9overnment to
introduce the scheme of :social control! in 1+-6
That is hy, 5&< insurance co!panies ere also taken o#er in $%B<, ith the
for!ation of the DI3. And to or"anise fiscal controls !ore ti"htly as per the
"oals set by the Tata)Birla Bo!bay Plan, Nationalisation of the $& !a.or banks
beco!e a necessity. ;nyho$, if not nationali'ed, many of the /rivate ban(s
$ould have colla/sed. The $& !a.or banks nationalised out of the e9istin" ?<
banks, controlled ?B= of bankin" in India. In $%?8 another < banks ere
nationalised to sa#e the! fro! collapse.
:
Bi" business re>uired !assi#e in#est!ents in infrastructure if it as to "ro.
Dack of infrastructure and capital as leadin" to sta"nation and decline.
Nationalisation and the e8/ansion of ban(in#, $as a necessary factor, to
systematically ta/ the /eo/le<s savin#s in order to #enerate the necessary
ca/ital The rural sector faced an a"rarian crisis. The idespread fa!ine in
$%<, found the rulers panic)stricken The PD)&?8 "rain doles, had, by no "ot
thorou"hly discredited An alternati#e had to be found. The Green Revolution
as their anser to ste! off peasant uprisin"s hich "ained acceptance and
!o!entu! a!on" the pro"ressi#e sections of the population. There ere
three basic ele!ents in the !ethod of the 0reen Re#olutionK
$. 3ontinued e9pansion of far!in" areasL
5. (ouble)croppin" e9istin" far!landL
:. Usin" seeds ith i!pro#ed "enetic
The initiation of the 0reen Re#olution re>uired certain a!ounts of seed capital,
"i#en on a concessional Ie#en freeJ basis to far!ers, to encoura"e the! to turn
to the C;V #arieties. =uch ca/ital and $ides/read disbursement could best
be achieved throu#h nationali'ed ban(in# ; vast net$or( of rural
ban(in# $as needed to be set u/, first to /romote the #reen revolution5
second to ta/ the sur/lus created to channel it into savin#s for use by
#overnment>bi# business for infrastructural develo/ment 2esides, lin(ed
to this, the focus for rural develo/ment chan#ed from asset #eneration to
/overty alleviation This coincided ith Indira 0andhi*s slo"an of Garibi
Hatao
%hy Privatisation?
In the period of "lobalisation and increasin" do!ination of international
finance capital, the !odel of de#elop!ent and the focus for !arket e9pansion
is the top $8= of the population. So all econo!ic policy is ai!ed at hittin" hard
the botto! ?8 to %8=, in order to fatten the top $8=. So subsidy cuts,
disband!ent of P(S, drastic reduction in elfare !easures, etc. are "eared to
push the !ass into e#en further destitution, and utili+e those funds to subsidies F
pro!ote bi" business, TN3*s interest, infrastructure de#elop!ent etc.
In addition, the "reen re#olution is in crisis and the bankin" structures that
acco!panied the! are not lon"er re>uired. Besides, forei"n a"ri)business plans
to enter strai"ht into the a"ricultural sector. 1inally, the bulk of the po#erty
alle#iation sche!es are bein" ound up or reduced to no!inal le#els in
re"ions. So the bankin" structures that acco!panied it are no lon"er re>uired.
1inally, the tappin" of people*s sa#in"s ill be restricted, due to !ass
&
i!po#erisationL and the $8= that ill be able to in#est their sa#in"s ill be
ser#iced by pri#ate and forei"n banks, ith hi"her ser#ice char"es.
So!e of the liberalisers ar"ue that e need to infuse the blood of dyna!ic
forei"n banks into the Indian bankin" industry
So!e ti!e in 'anuary588B the 1inance 2inister called the 3hair!en of the
public sector banks and told the! that they !ust i!!ediately act to !er"e their
banks and reduce the nu!ber of public sector banks to .ust four. Also they ere
told to rite off their NPAs INon)perfor!in" AssetsL or !oney loaned to bi"
business and not paid backJ fast. The entire purpose as to !ake the banks
#iable for forei"n take)o#er. Alon" ith the rethink on the >uestion of 1(I in
bankin", the "o#ern!ent has been e!phasi+in" the need for consolidation of
Indian banks The need to co!pete effecti#ely ith orld class banks asserted
in the 1inance 2inister*s speech cannot possibly refer to operations in o#erseas
!arkets, since the Indian banks are still too s!all both in ter!s of si+e and
ran"e of operations and products necessary to co!pete internationally. -hat
perhaps the profitable Indian banks could at !ost hope for in the near future is
to ser#ice the Indian diaspora and the international operations of Indian
corporates. The talk of takin" on the "lobal !a.ors is therefore ar"uably on
Indian soil here the "o#ern!ent is adoptin" a parado9ical policy of, on the
one hand, pushin" for consolidation of PSBs for fear of co!petition fro!
orld)class banks, hile si!ultaneously solicitin" !ore 1(I into bankin". 7he
#overnment<s fear that international ban(s could out3com/ete domestic
ban(s and ultimately ta(e control of economy3$ide ban(in# assets is real
2ut /recisely for these reasons there is need to restrict and discoura#e
ban(in# "DI
So, the privatisation of banks is necessary aspect of the ongoing globalisation
of their economy. It will result in massive retrenchment of staff. [i.e.,
agriculture, handicrafts and small scale sector putting the vast domestic
savings at the service of TNCs, closure of non!viable" branches and
throwing interest rates to the vagaries of the market.
#ut it is a irrefutable fact that =ince 1+-+, $e have been $itnessed @@ 2an(
mer#ers and acAuisitions, mainly because of the failure of /rivate sector
ban(s mainly due to Ber#ers and acAuisitions $ere done in /ublic interest
and to save de/ositors Bost of the /rivate =ector ban(s, $hich could not
survive, $ere bailed out by Public sector 2an(s
=o it becomes evidently clear one of the hidden items of a#enda of the
/rivatisers .fully su//orted by the recommendations of the t$o
B
Narasimham )ommittees0 is to clean u/ the balance sheets of the P=2s and
ma(e them ready for a ta(eover Ber#ers $ould ma(e them more
attractive for the shar(s roamin# around the #lobal financial seas
Any refor!s of the bankin" syste! should be built on the institutional structure
that has created it rather than seek to destroy it as is no bein" done.
The bankin" industry is in need of true refor!s in pursuit of true
nationali+ation, but the strate"y for it does not ha#e to sub#ert the basic "oals
of de#elop!ent nor does it ha#e to be forced at a pace that ill result in
li>uidation of the institutional structure built up o#er decades of faith.
Today efficiency and profitability has beco!e the catchords. It as thou"ht
that perhaps such holeso!e o#erhaulin", ill be i!possible for Indian
bankin" industry to ithstand and that it ill finally "i#e in and !ake roo! for
the forei"n "iants in this field. Thanks to the inbuilt resilience of our bankin"
syste! the bankin" industry has co!e out #ictorious. It could a#ert the crisis
that often follos the refor! process. 7o fall in line $ith #lobal
standards, nationali+ed banks also adopted Prudential accountin" nor!s,
Inco!e reco"nition and Asset 3lassification and beca!e stron" and healthy.
Apart fro! undertakin" the Social Bankin", the Public Sector Banks are
e>ually co!petiti#e at International Bankin" landscape.
Public =ector 2an(s o/erate in a disci/lined manner by observin#
com/liance of re#ulatory reAuirements and in fact it $as because of this
that the Indian ban(s have emer#ed relatively unharmed from the recent
#lobal financial crisis
The workmen and officer employees of banking sector have actively involved
in nation building by effectively implementing national agenda of
employment creation and economic $ Industrial growth and en%oy lot of
respect and popularity particularly in &ural $ Semi 'rban areas
-hile the efficiency of the bankin" operation lea#es !uch to be desired, hat
has been achie#ed has been unparalleled spread of bank branches and
"eneration of e!ploy!ent, hich has !ade tre!endous difference to the rural
and urban econo!ic acti#ity.
Any refor!s of the bankin" syste! should be built on the institutional structure
that has created it rather than seek to destroy it as is no bein" done.
<
The bankin" industry is in need of true refor!s in pursuit of true
nationali+ation, but the strate"y for it does not ha#e to sub#ert the basic "oals
of de#elop!ent nor does it ha#e to be forced at a pace that ill result in
li>uidation of the institutional structure built up o#er decades of faith.
Since $%<%, e ha#e been itnessin" ,, Bank !er"ers and ac>uisitions, !ainly
because of the failure of pri#ate sector banks as >uoted in the earlier para"raphs
of this report. 2er"ers and ac>uisitions ere done in public interest and to sa#e
depositors. 2ost of the pri#ate Sector banks, hich could not sur#i#e, ere
bailed out by Public sector Banks
That is hy in India)e re.ect)and totally re.ect any discussion about the Public
Sector only in ter!s of their profitability)inspite of the fact that they are indeed
far !ore profitable than the pri#ate sector.
-here did the Narasi!ha! report co!e fro!. It is a Mero9 copy of the I21
conditionalities. All the TN3s and 2N3s of the ad#anced nations in "eneral
and A!erica in particular.
-e kno the na!es of the forei"n banks takin" aay the crea! of business
fro! the Public Sector banks. -e kno the ne na!es of 3old (rinks, potato
afers, soaps and soap operas, cars and hite "oods, tele#ision and stereos,
!obile phones and hotels, ice crea!s and footear. The list is lon". They are
already e#eryhere. Not only ill such a step further infrin"e on the
so#erei"nty of the country, but ill ha#e a disastrous i!pact on the li#es of the
people. But the rulers of our country, actin" as the !ost #ile a"ents of the
forei"n poers, are pushin" throu"h this Nrefor!* at break)neck speed. They
ill "et bou>uets fro! the super poers, but brickbats fro! the !asses of
India.
%e are not interested in their Con line offences a#ainst our structured
$a#e structures %e (no$ they are not interested in even one day<s honest
labour D they $ant to leave it to us
%e (no$ that they cannot afford to close do$n the /ublic sector ban(s in
rural areas and non /rofitable centers 7hey are only interested in the
cream in the cities and /rofit centers li(e their cats $armin# itself inside in
the fire /lace $hile $e slo# outside and #uard the country li(e loyal do#s
Det the! not hoe#er think that the "reat orkin" people of this country, the
"reat !iddle class of this country, don*t kno hat is "oin" on. It is not
incidental that the orkin" people of this country, the "reat !iddle class of this
,
country don*t kno hat is "oin" onOIt is not incidental that the orkin"
people of this country strike in a tellin" !anner hene#er there is an election...
no onder they are illin" to !ake any kind of an alliance to a#oid elections.
They kno, alri"ht, that e do kno.
E"IN;N)I;F GH"OGB=!, CNP;<= I =);B= ;GH FIJH ;N O2JH)7
;ND I7= =K;DO%=L DHNMIN9 J*=7 %;9H GHVI=ION=
The ay the politicians, bureaucrats and pri#ate parties, industrialists bleeded
the public sector banks., appropriated its resources and "enerally used it for
buildin" their re"i!e of patrona"e syste! is also ell knon across the country
and needs no detailin". The industrialists and rulin" elite alays ski!!ed off
the entire crea! of public sector profits for their on pri#ate consu!ption
resultin" in bur"eonin" NPA*s and conse>uent hi"her pro#isionin" depressin"
profits and our share of a"es. They ha#e collected the returns, reaped the
profits and "enerally de!oralised the !orale. The Public Sector has sur#i#ed
inspite of the! and because of the do""ed deter!ination of the orkin" people
of the country to preser#e their .obs, security, di"nity and future. As far as the
Public Sector banks / fro! the infa!ous Na"ar#ala to the e>ually fla!boyant
Carshad 2ehta, Eetan Parekh / sca!s are only increasin" in their #olu!e and
audacity e#ery day co!pellin" banks to cushion hi"her pro#isionin" and
conse>uent depletion of profits and share of .ust a"es.
Gcono!ic Ti!es Bureau recently on 'un $8, 58$&,reprted that Just five of the
2@ #overnment o$ned ban(s /resently have net non3/erformin# assets
belo$ 2N, he /ointed out 7he develo/ment is si#nificant as the Indian
economyOs #ro$th sli//ed from 4+-N in 201231& to 4@N in 201&314,
leadin# to a &-N sur#e in #ross NP;s re/orted by ban(s in the /eriod 2y
Barch 2014, #ross NP;s in ban(s stood at nearly Gs 24 la(h crore
On "riday, July 4, 201&, almost all the leadin# ne$s /a/ers re/orted that
%rite Off I= Bore 7han Geal Gecovery of 2ad Foans in 2an(s Public
sector banks are ritin" off !ore loans than they reco#er, despite repeated
ad#isories fro! the finance !inistry. In the fourth >uarter of the last
financial year, of the 5< state)run lenders, as !any as $, banks had ritten
off !ore loans than they reco#ered.
:7he $rite3off by these 1@ ban(s in the January3Barch Auarter of
201231& $as hi#her than the $rite3off by all the 2- /ublic sector
ban(s in 2011312;ccordin# to data com/iled by the finance ministry,
1@ /ublic sector ban(s, includin# bi# lenders li(e =tate 2an( of India,
2an( of 2aroda and Pun1ab National 2an(, had $ritten off loans
?
$orth Gs 10,@@@ crore in January3Barch Auarter, $hile
the recovery $as Gs 4,1@2 crore durin# this /eriod Durin# 2011312,
/ublic sector ban(s $rote off loans $orth Gs 2,&00 crore, $hile the
recovery $as Gs 4@,600 crore 7he issue has alarmed the finance
ministry, $hich in a note to the ban(s, hi#hli#hted the /ractice and
reminded them the issue $as raised as early as July 200- and $as
reiterated in Barch this year 7he issue $as raised durin# a meetin#
of ban(ers $ith former "inance Binister P )hidambaram A loan is
$ritten off after ma(in# 100 /er cent /rovision, $hich hits ban(<s
/rofitability Ko$ever, this also hel/s ban(s to sho$ lo$er #ross
NP;s 2an(s, /articularly the #overnment3run ones, are facin#
head$inds as far as asset Auality is concerned amid economic
slo$do$n Not only #ross and net NP;s of /ublic sector ban(s are
hi#her than that of their /rivate sector counter/arts but these ban(s
also share hi#her burden on restructured loans!
As per Report of the 3entral Board of (irectors on the orkin" of the
Reser#e bank of India for the year ended 'une :8, 58$: sub!itted to the
3entral 0o#ern!ent in ter!s of Section B:I5J of the Reser#e Bank of
India Act, $%:&, in scheduled co!!ercial banks the 9ross NP; to
9ross ;dvances $hich 2+ in 2012 increased to &4 7he Net NP; to
Net advances for the same /eriod increased form 12 to 14.
The bad loans in PSBs has increased fro! Rs :%,888 crore in 2arch
588? to Rs $,<&,888 crore in 2arch 58$: and the bad loans restructured
and shon as "ood loans accounts to Rs :,5B,888 crore.
Hf the restructured loans, Rs 5, ,8,888 crore as in fa#our of corporate
borroers. If e include the bad loans in the pri#ate banks and forei"n
banks and other financial institutions, the total bad loans are !ore than
Rs 5,B8,888 crore
The pro#isions !ade for bad loans fro! the profits earned by the Banks
has been "roin" and it has sho a "roth fro! Rs $$,$5$ crore in
588?)8% to Rs &:,$85 crore in 58$5)$:, accountin" to a total of Rs
$,&8,5<< crore as pro#isionin" in the fi#e years.
A list of top B8 loan defaulters, !ainly the corporate fir!s, hose total
default a!ount to the banks is alle"edly to be around Rs &8,B5? crore.
%
In a period beteen 588? and 58$:, the banks4 "ross profit before
pro#isions for bad loans as at Rs :,B?,?%: crore, of hich the
pro#isions !ade for bad loans as Rs $,&8,5<< crore lea#in" the banks
ith net profit of Rs 5,$?,<5, crore.
2eanhile, the pro#ision co#era"e ratio has been fallin", !akin" the
banks !ore #ulnerable and susceptible to risks a"ainst loan losses and as
co!pared to the pro#ision co#era"e ratio of <? per cent as on 2arch :$,
58$5, it has reduced to <5 per cent by 2arch :$, 58$:.
6Accordin" to RBI, the ratio in the entire bankin" syste! has fallen fro!
BB per cent to &B per cent hile the "lobal a#era"e ratio is ,8 to ?8 per
cent
1or!er finance !inister 2r. 3hida!bara! accepted that at least 5$B
pro.ects ith in#est!ent of Rs , lakh crore ha#e been delayed in the
infrastructure space. Banks ha#e disbursed around Rs B&,888 crore loans
toards these stalled pro.ects. Hf the $5< ne pro.ects orth Rs :.BB
lakh crore, banks ha#e sanctioned Rs &:,888 crore as loan
Reser#e Bank of India IRBIJ (eputy 0o#ernor E 3 3hakrabarty said
banks had ritten off Rs $ lakh crore in the past $: years and criticised
the lenders because as !uch as %B per cent of these rite)offs ere for
lar"e borroers.
P(urin" the past $: years hat e see is that the bankin" syste! as a
hole has ritten off !ore than Rs $ lakh crore in ad#ances,7
3hakrabarty, the senior)!ost of the deputy "o#ernors at RBI, said.
Ce said o#er %B per cent of such rite)offs ha#e been obser#ed in the
case of bi" accounts and e9pressed an"uish that public discourse focuses
only on the "o#ern!ent*s a"ricultural debt ai#er sche!e of 588?.
P-e only talk about the debt ai#er of the a"ricultural borroers, e
don4t say bi" players and of this IRs $ lakh croreJ %B per cent are all bi"
borroers and it has been ritten off,7 he said.
Ca#in" earned a "ross profit of Rs.$,$5,5%8 crores @58$$)$5A, the present
offer of IBA is too !ea"re as a"ainst our !ini!u! de!and of 58= on
pay slip co!ponents as e9plained in .ustification & of this article ith
the stale!ate offer of IBA bein" $$=IRs:&<BcroresJour de!and of
5B= to be !et is I Rs.,?,Bcrores J , the cost analysis of de!and is
$8
!ea"re ?= of the "ross profit . After settin" apart this ne"li"ible
percenta"e fro! out of the profit earned to the hard orkin" bank
e!ployees, the balance can be di#erted toards pro#idin" bad debts and
other purposes prescribed by the Con*ble 1inance 2inister. (o e not
deser#e a s!all share of profits to !eet our le"iti!ate de!and of
reasonable co!pensationQ -hen the responsible reply does not co!e
forth, should e not conclude that the 0o#ern!ent policy is profitin" the
pri#ate by alloin" the banks to decay throu"h de!oralisin" the staffQ
Addin" fuel to fire, the state!ent of for!er 1inance 2inister in the
!eetin", at the ,?th foundation day of Indian H#erseas Bank, painted a
picture that the entire profit earned are to be set apart for the a"e
increase for the Bank!en hen public sector bank e!ployees ent on
a to)day strike today seekin" .ust share a"es . 1inance 2inister P.
3hida!bara! said the profit of banks cannot be used only to enhance
salaries because there are other obli"ations. The e9pressions of the
for!er 12 is really unfortunate and a pro#ocati#e one.
The banks, hich refuse hi"her a"es to its e!ployees, ai#ed bad
loans of bi" corporates causin" se#ere loss to the banks. -hile the NPAs
of bi" corporates ere i"nored or ai#ed, the s!all defaulters ere
!ade to suffer ith puniti#e action. Then hy are e bein" asked to
participate in their insincere crocodile tears for the efficiency and
profitability of the Public Sector banks .especially hen The
producti#ity per e!ployee, the business per e!ployee and branch and
profitability of the public sector banks has enhanced !any folds.
6Bank loan rite)off is an industry by itself. The rite)offs are #ery
syste!atic and scientific. as socially conscious citi+ens e hold the #ie
unani!ous that e!ployees cannot be held responsible for the banks4 bad
loans.
As per the data published by a leadin" e!ployees union the NPA of top
B8 corporate defaulters in this country is esti!ated to be Gs40, 426
)rore Hven if 1+4&N is recovered it is sufficient to meet our
demands
And finally a!ount is If the four defaulters of the country
@i.e.A Ein"fisher Airline Iho! so!e banks ha#e declared recently as
ifuldefulterJ Rs.5<,: crores, -inso!e (ia!ond and 'eellery 3o.,
Dtd., Rs.5<<8 crores, Glectrother! India Dtd., Rs.55$$ crores and Roo!
(e#elopers P Dtd., Rs.$?$8 crores a!ountin" Rs.%:B& crores ould also
$$
suffice the !ini!u! de!and of Rs. ,?,Bcr as .ust a"e re#ision to the
entire Bankin" orkforce.
By initiatin" the folloin" steps, e can easily find necessary resources
to !eet all our .ust de!ands, ithout costin" the e9che>uer. There !ust
be a ti!e bound action plan for enforcin" the!.
aJ Stren"then the reco#ery tools and le"al !echanis!s, >uicken the
process ti!e and cut don the delays.
bJ 2ake the 3(R, HTS under 3o!pro!ise route and -ritin" off !ore
transparent, accessible to "eneral public throu"h #oluntary
disclosures and "et the! co#ered under RTI.
cJ Publish the photo"raphs of the defaulters in all national ebsites )
respecti#e lendin" banksFfinancial institutions, RBI, 3IBID, Ratin"
A"encies, SGBI and 23A.
dJ Stop lendin" further to the borroersFinstitutions blacklisted.
eJ Beyond certain a!ount of Real Account Diability Isay, Rs.$8.88
3roresJ, banks !ust be alloed to sell the properties !ort"a"ed, after
folloin" due process of la, ithout the inter#ention of courts and
ithout e#en resortin" to action under SAR1AGSI Act. But, it !ust
be ensured that Principles of G>uity and Principles of Natural 'ustice
are folloed.
fJ Ade>uate incenti#es and co!pensation !ust be "i#en to the banks for
lendin" under "o#ern!ent sche!es
"J In case of !assi#e loan ai#ers, banks !ust be co!pensated upfront
Ii.e. funds !ust be pro#ided beforehand to the banks
hJ Publish the list of ban( loan defaulters of Gs 1 crore and above,
ma(e $illful default of ban( loan a criminal offence, order
investi#ation to /robe ne8us and collusion, amend recovery la$s
to s/eed u/ recovery of bad loans and ta(e strin#ent measures to
recover bad loans.
iJ (o not incenti#ise corporate delin>uency.
$5
.J (e#ise and 0rant incenti#es tan"ible IcashJ and intan"ible Ifast track
pro!otions, soft postin"s etc...J to staff au"!entin" reco#eries of
NPA.
Geforms =hould 2enefit ;ll
The H9ford Gn"lish (ictionary has sta!ped its appro#al on the ord by
definin" 6refor!6 as 6!ake chan"es in Iso!ethin", especially an institution or
practiceJ in order to i!pro#e it6.
In recent ti!es, another shade of !eanin" has "ot loaded onto the ordK
6refor!6 as an action that lets !arket forces set the prices of "oods and ser#ices
as ell as interest rates.
3on#ersely, it !eans ha#in" the state play a lesser role in econo!ic affairs.
Thus, 6bankin" sector refor!s6 in India ha#e co!e to !ean alloin" !ore
pri#ate sector banks to set up shop and lettin" the !arket, not the Reser#e Bank
of India, set interest rates. In other ords, it !eans "i#in" banks !ore freedo!
to operate.
-hat is pu++lin", thou"h, is that in the US today 6bankin" refor!6 has e9actly
the opposite !eanin" to hat it has in India. -hen A!erican !edia and policy
!akers talk of 6bankin" refor!6, they !ean puttin" !ore controls on banks.
1or!er Pri!e 2inister Indira 0andhi as roundly conde!ned by the US and
other -estern poers hen she nationali+ed banks in our country in order to
ensure that credit reached the poor and poerless. (ee!ed to be a socialist ) or
co!!unist)like !easure ), it has no been adopted ithout any >ual!s by the
a#oed orld leader of free !arket econo!ies. It see!s the US "o#ern!ent
had little choice, as otherise idespread !ayhe! !ay ha#e resulted for the
a#era"e citi+en both ithin US and abroad. 3learly the rules of the "a!e
chan"e for -estern econo!ies durin" crisis. Nationali+ation can be resorted to
hen the A!erican other de#eloped nations people need to be protected but
the sa!e !easure can be decried hen a de#elopin" econo!y needs to do so to
si!ilarly protect its far !ore i!po#erished citi+enry.
Thus, the 6bankin" refor!6 under ay there currently, accordin" to The -all
Street 'ournal, ill put 6ne hei"htened capital and le#era"e li!its6 on bi"
$:
banks, 6instructs the "o#ern!ent to conduct unprecedented, on"oin" audits of
the central bank4s lendin" pro"ra!s6.
Not only does 6refor!6 !ean different thin"s in different countries, it !ay also
!ean different thin"s in the sa!e country at different points of ti!e. 1or
instance, 6labour refor!s6 in the $%B8s in India "enerally !eant "i#in" orkers
the ri"ht to for! unions.
Today, hoe#er, they !ean the oppositeK "i#in" e!ployers "reater fle9ibility in
hirin" and firin" orkers.
It is also useful to re!e!ber that a 6refor!6 of one era could result in a
situation that re>uires 6refor!s6 of another era to be undone. 1or e9a!ple, the
"eneral senti!ent in the $%<8s as that Indian banks ere too cosy ith
business "roups that oned and controlled the!, and ere not risk)takin"
enou"h in openin" branches and lendin" to ne entrepreneurs.
These senti!ents, in the course of ti!e, led to the nationalisation in $%<% of $&
of the lar"est banks, hich ere then pushed to e9pand. By $%%8, deposits had
increased ei"htfold to Rs $.$ lakh crore and the nu!ber of branches tenfold to
<8,888. But this heady e9pansion also created non)perfor!in" assets and
hidden losses on their balance sheets. VoilaS The $%%$ 6bankin" refor!s6
recapitalised these banks, ith the "o#ern!ent pu!pin" !oney.
;ou can also set different standards for 6refor!6 for yourself and for others.
Thus, the stockbrokers on the Bo!bay Stock G9chan"e are alays in the
forefront of calls for 6financial refor!6 in the econo!y but resist 6stock
e9chan"e refor!s6. So stron" as the brokers4 resistance to, for e9a!ple,
co!puterisation that the "o#ern!ent had to set up a parallel stock e9chan"e,
the National Stock G9chan"e, to "et it done.
The success or failure of refor!s can also be in#ented. In their recent orkin"
paper, 6The Social 3onstruction of Successful 2arket Refor!s6, H9ford
Uni#ersity sociolo"ist (a#id Stuckler and the co)authors say that the success of
6refor!s6 and the statistics to pro#e that they are successful are socially
constructed by !oti#ated actors such as the bureaucrats in a"encies that ran
their pro"ra!!es and players in the financial ser#ices industries. 1or instance,
the e9tensi#e statistics published by the Guropean Bank for Reconstruction and
(e#elop!ent IGBR(J about the Gast Guropean e9perience in the $%%8s are the
basis of the belief that lar"e)scale pri#atisation IT6refor!s6J leads to rapid
econo!ic "roth. But hen the authors re)e9a!ined the sa!e data, 6the
positi#e "roth effect of lar"e)scale pri#atisation disappears ... @su""estin"A
$&
that !any cross)national studies usin" the GBR(4s statistics ha#e potentially
substantially o#erstated the links beteen neo)liberal refor!s and positi#e
outco!es6.
7he ne8t time you hear a call for EreformE, it mi#ht be useful to as(, E"or
$hose benefit is this reform?E
The 0uardian British national daily nespaper published on 5,)5)585 so!e
startlin" re#elations ith re"ard a"es paid in public*s sector #is)U)#is pri#ate
sector in U.E.
PPublic sector orkers are !ore skilled, ork shorter hours and earn !ore
!oney than their pri#ate sector counterparts, accordin" to a ne analysis of the
differences in pay out today.
But, if you ha#e a de"ree, you ill "et paid better in the pri#ate sector ) and, for
fi#e out of ele#en years of data published by the Hffice for National Statistics,
the pri#ate sector "ot better pay increases.
But, if you ha#e a de"ree, you ill "et paid better in the pri#ate sector ) and, for
fi#e out of ele#en years of data published by the Hffice for National Statistics,
the pri#ate sector "ot better pay increases.
The key facts areK
In 58$$, public sector e!ployees ere paid on a#era"e beteen ,.,=
and ?.,= !ore than pri#ate sector e!ployees
The public sector is !ade up of a hi"her proportion of hi"her skilled .obs
/ idenin" o#er the last decade as loer skilled .obs ha#e been
outsourced fro! the public to the pri#ate sector.7
The public sector consists of a hi"her proportion of older e!ployees and
earnin"s tend to increase ith a"e and e9perience
SourceK httpKFF.the"uardian.co!FnesFdatablo"F58$5F!arF5,Fpublic)
pri#ate)sector)pay
-ith The !ain !antra DP0 policies ar"ued by prota"onists and by successi#e
"o#ern!ents in poer bein" "lobal co!petiti#eness, "lobal brand, and "lobal
standards. etc. I hope they !ay take leaf fro! this article and adopt si!ilar
pro"ressi#e a"e structures in Indian Public Sector / described as te!ples of
!odern India by Pandit 'aaharlal Nehru and to its e!ployees.
$B
These pro"ressi#e thou"hts ere echoed by the for!er Reser#e Bank of India
IRBIJ "o#ernor ( Subbarao. 3oncerned o#er lo salary structure in PSU
banks, he said that in the absence of suitable co!pensation packa"e they ould
lose talent to pri#ate sector lenders.
PThe e9ecuti#e co!pensation in the public sector, as is ell knon, is loer
than that in the pri#ate sector...If public sector banks are re>uired to co!pete
ith pri#ate sector banks on a le#el playin" field, there is a "ood case for
co!pensatin" the! too on a co!petiti#e base7, Subbarao said a conference
or"ani+ed by IBA and 1I33I.
PThere is a "ood reason to re#ise their IPSU bank e9ecuti#esJ co!pensatory
packa"es...There is also a risk that if the public sector bank co!pensation is not
i!pro#ed, the public sector !ay lose talent to the pri#ate sector,7
SourceK PTI Sep 8, 58$8
httpKFF.li#e!int.co!FPoliticsFVl-o+Ah:>#!-scRDGByh!2FSubbarao)
for)hi"her)salaries)to)chiefs)e9ecuti#es)of)PSU)ba.ht!l
%hile endorsin# the su##estion the #overnor $hole heartedly a lo#ical
corollary one can dra$ is that 2an( em/loyees can le#itimately e8/ect the
same concerns to besto$ed on them in the 10 bi/artite $hen tal(s are
afloat of in ma(in# Indian ban(s com/etitive #lobally in /ursuit of its
ran(in# $ith in the first 100 ban(s
1ro! the for"oin" the #ital point that arise for consideration if e e#aluate the
a"e load purely in Rupees as per the trend folloed in the pre#ious bipartite
settle!ents to hich !y sub!ission and ansers inter)alia is as under
Bipartite at a "lance of a$ard staff only
;dditional Per )a/ita H8/enditure on %a#es .%or(men0
:
rd
BPS Rs. %B8 per annu!
&
th
BPS Rs. 5,588 per annu!
B
th
BPS Rs. &,$B8 per annu!
<
th
BPS Rs. ,,:%8 per annu!
,
th
BPS Rs. $5,BB8 per annu!
?
th
BPS Rs. 5:,::8 per annu!
+
th
2P= Gs 44,0@0 /er annum
$<
;nnual %a#e Increase in Previous =ettlements ."or %or(men0
;mount in Gs > )rores
:
rd
BPS ::.88
&
th
BPS $58.88
B
th
BPS 5,$.88
<
th
BPS &?5.88
,
th
BPS ?$?.88
?
th
BPS $5??.88
+
th
2P= 2,4@@00
Note: This annual increase of Gs 2,4@@ )rores is in addition to the
contribution by the Banks at Gs 4,200 )rores Ifor e9istin" P1 HpteesJ and Rs.
5,$88 3rores Ifor Retired P1 HpteesJ to enable the! to .oin the pension
Sche!e
Percenta#e ;nnual %a#e Increase in Previous =ettlements ."or %or(men0
Settle!ent -a"e load in Rs. Increase in Rs Increase in =
:
rd
$)?),% :8
&
th
$,)%)?& $58 %8 :88
B
th
$8)&)?% 5B5 $:5 $$8
<
th
$&)5)%B :?? $:< B:.%<
,
th
5,):)5888 ?$? &:8 $$8.?5
?
th
5)<)588B $5?? &,8 B,.&BV
%
th
5,)&)5$8 VV5B,, $5?% $88.8,
Vbefore the ?
th
bipartite co!puteri+ation incre!ent as settled. e ha#e to
add that also ith this load
VVpension option cost e9cluded
-a"e load for %
th
bipartite as, Rs.55:% crores for officers i.e. &B.%$ = and
5B,, crores for aard staff i.e. B:.B= and Total a"e load Rs &?$< cr.
In other ords beteen ?
th
and % bipartite the increase in a"e load for aard
staff Iork!enJ as $88.8,= i.e. in B years
;//lyin# the similar lo#ic the increase in $a#e load the initial offer in this
10 bi/artite for $or(men alone has to be Gs 24@@ P 24@@Q 4144 cr
;//lyin# the same lo#ic for both officers and a$ard staff if the traditional
a//roach distribution of $a#e load to a$ard staff and officers is follo$ed
as the +
th
bi/artite /attern the total $a#e load in ru/ees for both
$,
.$or(men and officers 0should be minimum Gs6-00 cores , $hich in
/ercenta#e terms $or(s out to 2@4N
It is /ertinent to underscore here the total number of $or(men has come
do$n from 4,@0,000as on Barch &1,200@ to 4,40,000 as on Barch &1,2012,
$hereas the number of branches in P=2<s increased from 4+,4@& to -@,+&0
.other than ID2I ban( 0 des/ite the fact bet$een 1+64 to 2004 ne$
recruitments in the P=2s $as sto//ed, and restrictions $ere im/osed on
issuance of licenses au#mentin# branch e8/ansion, and around 2 la(h
ban( em/loyees acce/ted VG= 2001and their vacancies $ere not filled u/
In ter!s of statistics, the results of VRS588$ sche!e ere dra!atic. In 5888)
8$, the staff cost of all the 5, public sector banks Iincludin" 3orporation Bank,
hich did not opt for VRSJ, as Rs 5$,8B8 crore. By 588$)85, staff costs had
dropped to Rs $?,%B% crore. There ere reports in nes !edia that a candid
notice ere issued by so!e banks askin" custo!ers to bear ith the
incon#enience caused by the #oluntary retire!ent sche!e IVRSJ says it all.
Banks suffered as a result of the industry)ide VRS that as i!ple!ented by
5< banks fro! 5888. VRSs had an i!pact on e!ployee !orale. But it is also
true that the e9ercise has left se#eral bank !ana"e!ents dissatisfied ith the
results in business ter!s too. It should be acknoled"ed here that the sur#i#in"
staff in this crucial VRS period shared additional ork load to satisfy custo!er
incon#enience
And the a"es as = to total e9penses hich as $&.<< as on :$):)588? has
drastically co!e don to $:.,5 a son :$):)58$5. The business per e!ployee
hich as Rs.B%&lacs as on :$):)588? increased to $$B$lacs as on :$):)58$5.
The profit per e!ployee hich as :., lacs as on :$):)588? increased to <.&
lacs as on :$):)58$5.
The producti#ity per e!ployee, the business per e!ployee and branch and
profitability of the public sector banks has enhanced !any folds durin" the
interre"nu!.
1urther there is steep rise in the 3PI inflation and the salaries in absolute ter!s
ha#e also been eroded. 3onsu!er price inde9 has already increased by $B8$
nu!bers o#er &&&8 hich as pre#ailin" on 8$F$$F58$5 i.e. the le#el at hich
IBA has a"reed to !er"e the (A ith basic pay.
Mou so$ $hat you rea/L

-ith the banks a!orti+in" the cost of VRS 588$ in their balance sheet , the
sa!e !ethod can be adopted by banks hose balance sheet are not robust
$?
because of hea#y pro#isionin" of NPA, to !eet the difference beteen IBA*s
offer and unions de!and hich can be offsetedFad.usted ith NPA reco#ered
durin" the a!orti+ation period by adaptin" a""ressi#e steps !entioned abo#e
and due to bolstered !oti#ational le#els of the e!ployees in au"!entin"
reco#eries hich .ust re#ision is bound to ha#e effect.
%here there is $ill, there is a$ayL
The ine#itable conclusion hich e#en laity can dra therefore is I2;<
stalemate offer of 11N $hich amountin# only &4-4 crores is un1ust. Kence
our demand of 24N hi(e amountin# to Gs @6@4crores alone shall meet Hnd
of 1ustice, fair /lay and eAuity .RHD0 I(uod erat demonstrandumJ
Cnow at least let them not mourn
and allege #ank employees earn.
more than they yearn
$%
statistics they should learn)
:Fo$ %a#es and Ki#h Productivity is HSPFOI7;7ION
Fo$ Productivity and Ki#h %a#es is )K;GI7M
Fo$ %a#es and Fo$ Productivity is =*I)IDH
Ki#h %a#es and Ki#h Productivity is PGO=PHGI7M!
:Ba(in# decisions is often difficult %e hesitate, not sure if $e are ma(in#
the ri#ht decision =ometimes $e need to trust ourselves and move ahead
It is normal to second #uess oneOs self T to Auestion if one is doin# the
ri#ht thin# 2ut ultimately, one must stand u/ and be counted %hat
decisions are you facin# that you are uncertain about? %hat decisions are
you re#rettin# havin# made? %hat does your heart say? DonOt let your
analytical mind $in 7rust your heart 9o ahead $ith your thou#ht
centric /osts!

T 2ertolt 2recht
9erman Poet, Play$ri#ht
16+6 3 1+4-
7o be continued
58

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