SBI losing business as strike bites: Chairman
Many of SBI's ATMs, from where about Rs 1.5 bn are withdrawn by depositors a day, now sport boards, "No cash".india Updated: Apr 08, 2006 10:42 IST
India's largest lender, State Bank of India, is losing business to other banks as an indefinite strike by its staff entered the fifth day on Friday, its Chairman said.
The stir by more than 200,000 workers at the government-run bank, demanding an increase in the bank's pension limit of Rs 4,250 a month set in 1992, that began on Monday has crippled the bank's operations.
He did not quantify the loss of business.
State Bank, which has 9,000 branches across the country, earns more than 10 per cent of its net profit from the funds that governments deposit with the bank, analysts said.
Purwar said the government of the northern state of Uttar Pradesh had shifted its business to state-run Allahabad Bank.
Many businesses and rival banks have also stopped accepting cheques of State Bank because they are difficult to encash with the strike in the full swing.
"Please do not deposit the cheques of SBI since they are not participating in the clearing process," Standard Chartered Bank said a notice posted at a Mumbai branch.
Many of the State Bank's automated teller machines, from where about Rs 1.5 billion are withdrawn by depositors a day, now sport boards, "No cash".
"We will continue with the strike till such time the government yields to our demands," said Shakti Haldar, general secretary and vice-president of the All India State Bank Officers' Federation, one of two unions leading the strike.
"We are also concerned about the loss to SBI, but we are hopeful of getting the business back, because SBI has a brand value," he added.
State Bank shares rose 1.1 per cent this week to Rs 978.55, but had underperformed the main BSE index, which rose 2.7 per cent.
"There is no way in today's world, that such an indefinite strike for howsoever genuine demand should take place," Purwar said. "It is high time that we look after customers."
The strike may be a boon for smaller rivals, including those in the private sector that have been clamouring for a share of the government's billions of rupees of business.
"Banks like HDFC Bank and ICICI Bank could make the most of it," said Hitesh Kuvelkar, analyst at First Global Securities. "It (SBI) was almost like a substitute for the government, and that faith is going to be shaken now."
State Bank is the biggest player in India's foreign exchange and money markets, and it is often used by the central bank to intervene in the markets to curb excessive volatility.