ECONOMIC
HIGHLIGHTS
New
Delhi, 7 August 2009
Bank Employees Blackmail
NPA BUCK STOPS AT STAFF DOOR
By Shivaji Sarkar
It is the worst blackmail of 110
crore people by 10 lakh bank employees. They have no rationale to go on strike
as their major demand for 17.5% increase of wages has been accepted. But no
sooner had the Indian Banks Association accepted it that they jacked up the
demand to 20%. Clearly, a gross irresponsible attitude.
Since employees in different sectors
have got a raise, the demand cannot be outrightly rejected. The bank employees,
however, have a limited claim. They are only managers of people’s money put in
their custody. They hardly earn. They are only known to lose. They are also
responsible for the high non-performing assets (NPA) --- literally losses.
Holding the nation to ransom for two
days has cost the nation billions. It has affected national and international
trade. It has caused immense problem for thousands of job seekers who have to
arrange for bank drafts and traders who have to arrange for bank guarantees and
payments.
It also raises doubts about the
credibility of the system. Such irresponsible attitude also leads to the growth
of the parallel subterranean sectors like hawala and hundis. The
subterranean sectors have been growing over decades primarily because of their
efficient functioning that is not known to break-down.
The Basel II norms --- the
principles set for making banking more credible and efficient --- have not made
much difference to the banking system in the country. On paper most of the
Indian banks have improved on their capital adequacy ratio in line with the
global Basel II norms. But the staff has not been able to do much to reduce the
NPAs. Instead, scandalously the NPAs have increased by 25.67% in the case of 14
scheduled public sector banks.
Undoubtedly, the present losses due
to the strike have to be quantified. The inefficiency of the staff has also
made the banking operators increase their charges indiscriminately making it
one of the most expensive banking system’s in the world. It is oppressively
expensive for a nation that has almost 70% people out of the banking system.
The high cost has made it unaffordable.
Sadly, the staff does not consider
it their responsibility to make the system affordable. The losses are mounted
on the nation. Being organized, the staff thus extracts whatever pound of flesh
they want.
Not for them the fact that the bank
staff is supposed to protect the wealth of their custodians. Instead, they are
breaking into it, weakening the national financial system and pushing the
country back on its quest for progress.
Importantly, an ASSOCHAM study has
expressed concern over the risk management practices of the banks. It said that
the net non-performing assets of 14 commercial banks, in absolute terms, have
increased by 25.70%. Wherein the Gross NPAs of banks rose from Rs. 283.9258
billion ($7.47 billion) to Rs. 321.2948 billion ($8.45 billion) between
2007-2008.
The maximum rise of 266% in net NPAs was witnessed by the
Punjab National Bank in the third Quarter of 2007-08, followed by the Centurion
Bank of Punjab with an increase by 125%, ICICI Bank 77%, Vijaya Bank 49%, HDFC
Bank 37.46% and the State Bank of India 25%.
In simple terms this means that the
staff has virtually misappropriated Rs 32100 crores. Since the banks are in the
public sector and even the private banks deal in public money, the losses are
dumped on the users conveniently. The recent Lehman Brothers and AIG debacle in
the US
has not taught the sector any lesson.
Additionally, an employee in a
sector gets a raise based on the factors of the prevailing price rise,
performance and profits of the sector.
The bank employees qualify only on the first count. Yes, they have
qualified for the dole because of high food and consumer price inflation. On
all other counts they have miserably failed.
Needless to say, the Indian Bank
Association (IBA) has taken the decision of granting 17.5% hike without taking
the nation into confidence. Can the bank users afford this kind of illogical
raise when their actual wealth is shrinking? The IBA should not function like a
cartel. It has to function in the interest of depositors and other users. Its
functioning in managing the banks has also been questioned. Before accepting the
grant of any raise it should have consulted with the people on whose money they
do business.
The negotiations would be on for
quite some time. The IBA needs to stress on the cost of sharing the losses. The
wage agreements have to be transparent. Since the society can bear the cost
only in a limited manner of less than 0.10%, the cost of the losses must be
dumped on the staff and officers at a proportion that needs to be decided. The
staff and officers should be told that every gain has its risks as well and
they could not evade that.
The settlements of the NPAs must be
done every year. This would also have a salutary effect. The officers and staff
would feel more responsible while handling public money. They would treat the
bank customers with more respect and hopefully harass them less.
The employees are correct in
demanding the pension. The financial sector at the prompting of the stock
market wants pension to be linked to the equity market. This puts public money
again at high risk and it adds to the profits of the manipulators. This demand
of the bank employees should be accepted and the pension must not be left to
the speculators.
The wage agreements should have
checks both on the employees as well as the employers. If employees have to pay
for operational losses, the employer also does not have right to play with the
money of employees --- pension after all is deferred wages and not a dole.
The IBA and employees are both
responsible for the present morass and they need to settle it without dumping
any cost on the nation. ---- INFA
(Copyright,
India News & Feature Alliance)
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