Strikes may hobble govt’s bank consolidation plans | business | Hindustan Times
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Strikes may hobble govt’s bank consolidation plans

The government wants to merge banks weakened by bad debts with bigger ones that have strong balance sheets. But employees fear pink slips, and are threatening strikes

business Updated: Mar 28, 2016 12:08 IST
Mahua Venkatesh
A bank branch in Mumbai wears a deserted look during an employees’ strike
A bank branch in Mumbai wears a deserted look during an employees’ strike(AP file photo)

At a time when the government seems determined to go ahead with financial sector reforms and consolidation of public sector banks, employees of the banks could throw a spanner in the works, with frequent strike calls by the unions.

The All India Bank Employees’ Association is planning to go on a day’s strike on May 25 to oppose the government’s bank consolidation move, while IDBI bank employees are on strike from Monday in opposition of the finance ministry’s decision to divest a stake in the bank.

Bank unions have promised that if the government does not meet them half-way, strikes could become more frequent and regular.

The unions have also opposed the government’s proposal to go in for campus recruitment to fill up vacancies.

“We will not allow the government to carry on the so-called reform exercise and consolidate public sector banks and we are planning to hold go on strike next month if things do not improve,” CH Venkatachalam, general secretary, All-India Bank Employees’ Association, told HT.

Representatives of bank unions, along with CPI national secretary D Raja, met finance minister Arun Jaitley last week to discuss these issues. According to the unions, the focus should be on recovery of pending loans, and a probe should be constituted to fix accountability.

The government however is in no mood to buckle to pressure. A finance ministry official said the reforms process would be carried out, though he said all stakeholders -- including the banking unions -- would be consulted before any decision is taken.

Meanwhile, public sector banks have been asked to prepare a plan for raising capital from the market. They have also been directed to identify their non core assets which could be monetised to offset the heavy burden of bad debt.

The economic survey presented last month underlined the urgent need to address the challenge arising from the balance sheet problems of government banks. The survey prescribed recapitalisation to the tune of Rs 1.8 lakh crore by 2018-19 .

It also recommended the ”Four R’s” -- recognition (banks must value their assets), recapitalisation (infusion of equity to safeguard the capital position), resolution (selling of stressed assets), and reforms in order to rule out similar problems cropping up in the future.