Bank strike: Why there’ll be no real winners in trade unions’ fight against banking reforms

The bank employee unions strike on Tuesday to protest against the ‘anti-people banking /labour reforms’ will likely end up hurting only the common customer approaching bank branches to do his/her normal banking transactions. To be sure, many demands raised by the trade unions pertaining to working hours, employee benefits and wages deserve to be heard. However, chances are less that this pan-India protest will force the government to rethink on certain other demands, such as reimbursing cost of demonetisation to banks and criminal action against wilful defaulters.

On the issue of merger of state bank subsidiaries with the parent, another area of contention, trade unions are again fighting a losing battle. As we have seen in the last two instances when the government merged two of the subsidiaries with the parent, State Bank of Indore and State Bank of Saurashtra, such objections have not shown any results. With the government setting the stage for merger of remaining five subsidiaries with parent (State Bank of India) effective 1 April, there isn’t much the trade unions can do but fall in line.

The larger question is this. Isn’t it time trade unions rethink on their aversion to consolidation in banking sector and the idea of privatisation? It is even more critical now to think about privatisation of some of the nationalised banks now with evidence emerging to say that the four decades of nationalisation has only damaged the health of state-run banks. State-run banks continue to be the extended divisions of the incumbent governments and mere tools to roll out government schemes. These entities are also highly vulnerable to corporate-political nexus, as empirical evidence suggests. These banks still lack autonomy and scope to innovate in major way unlike their private sector counter parts.

Compared with this, the private sector banks continue to be much healthier than state-run lenders on all parameters on account of the free market principle they operate in. Only those which have improvised their business models have been able to survive. The laggards have been forced to shut shop or merge with stronger rivals over time. Those remaining are fit to face competition and find capital from the market time to time by growing healthy balance sheets.

State-run banks continue to be the finest specimens of white elephants in the Indian banking sector. They wait for their turn with a begging bowl every year in front of North Block for survival money. This ‘begging bowl syndrome’ has been present since the time they were born. They still continue to be a heavy burden on the state exchequer. The governments, both past and present, have miserably failed to address the capital needs of PSBs, which will have long-term ramifications on their health.

Over years, trade unions have weakened, so is the effectiveness of their protests. Unlike the old days, now branch banking constitutes only one mode of banking. Customers today can use ATMs, internet and mobile banking services for basic banking transactions even on a strike day. But, other transactions that require the customer to go to the branch gets disrupted.

For years, trade unions in state-run banks has acted as a powerful corrective force against the excesses by bank managements but has somewhat lost steam in the recent years with the newly joined young officers and employees showing no active interest in union activities, even though most of them religiously contribute to the monthly subscription fees.

However, one cannot ignore the fact that the trade unions continue to be a formidable force in nationalised banks. A confrontation between unions and the managements will only be self-destructive for both. In this backdrop, bank trade unions should seriously rethink their course and priorities for the greater good of the banking sector.

Reforms in the public sector, especially, consolidation of smaller banks are something that is unavoidable and long overdue. So, letting in private capital come to some of the state-run banks will make them even more efficient and professionally run institutions while retaining some amount of their public sector character.

Instead of blindly opposing the much-needed reform steps, it would have been far better if trade unions constructively engage with the government to jointly prepare a roadmap for the future of public sector banks. There are no real winners in this round of battle.