Unions willing to sign banks' turnaround pact, with riders

Bank unions agreed to sign a turnaround pact in Kolkata on Friday, provided the lenders discussed the blueprint with them. 

In a big relief to banks, the unions of 10 banks are also expected to agree on curtailment of perks, subject to conditions.
 

 "We have decided that we will have no objection in signing the memorandum of understanding (MoU), provided the turnaround plan is discussed with us before implementation," Rajen Nagar, president, All India Bank Employees Association told Business Standard.
 

On Thursday, the banks had sent out MoU copies to unions stating "management, employee union, and officers' association commit by this MoU that they take the responsibility of successful implementation of the turnaround plan."
 

The turnaround plan for banks is being formulated by SBI Caps.
 

"We will have to decide what kind of cut in perks banks are talking about. If they ask for 50 per cent cut, that is obviously not acceptable to us," said Nagar.
 

The banks will also seek more transparency on restructured assets and ask for making public the name of big defaulters. 

Recently, the Centre had sent letters to 10 banks, asking them to lay out a revival road map for availing government funds. The letter also said that some staff benefits could be restructured on a temporary basis.  
 

Some banks with high non-performing loans (NPLs) might require more stringent austerity measures than others. For example, at the end of December quarter, Kolkata-based UCO Bank’s NPLs were 17.18 per cent of total loans made.

"Any MoU will be implemented with full support of employees," Ravi Krishan Takkar, managing director and chief executive of UCO Bank, had earlier told Business Standard.
 

While UCO Bank already received close to Rs 775 crore from government, it is yet to receive another Rs 1,150 crore. The bank had posted a net loss of about Rs 437 crore for the quarter ended December. 
 

Pawan Kumar Bajaj, managing director and chief executive of United Bank of India, refused to comment on the MoU issue. The bank has already taken a few austerity steps, like curtailment of electricity costs, and is considering reducing branches. The bank had posted a net profit of about Rs 64 crore for the December quarter. Its NPLs stood at around 15.98 per cent of total loans made at the end of the December quarter. The bank has got Rs 418 crore from the Centre.
 

Rakesh Sethi, chairman and managing director Allahabad Bank, could not be reached for comments. The bank had reported a net profit of Rs 75 crore for December quarter. Its NPLs rose to 12.51 per cent of the total loans made at the end of December quarter. The bank has been given Rs 418 crore by the government.