IDBI Bank unions threaten strike over wage revision

Around 17,000 employees of the troubled state-run IDBI Bank, that has been reporting heavy losses on rising bad loans for several quarters now, have threatened to go on a nationwide strike if the management fails to conclude a new wage pact before the month-end.
The salary revision of IDBI Bank employees, who do not come under the Indian Banks Association (IBA's) industry-wide wage settlement, had been pending since October 2012. Since then the unions and IDBI Bank management could not conclude a new wage pact as the latter was awaiting IBA wage agreement.
"We are shortly going to write to Managing Director Kishor Kharat seeking his intervention. If the bank management does not call them (unions) for negotiation before October 31, we may go for agitation which includes one-day strike in November," IDBI Bank Officers Union General Secretary Vithal Koteswara Rao told PTI.

Of the 17,000 employees, 15,000 are officers. The last wage revision for IDBI Bank employees was applicable from June 2009 to October 2012.
Last May, the IBA, the apex body representing bank managements, signed a wage settlement with unions and officers associations of 43 lenders, including public sector ones, old private banks and a few foreign banks.
Under this, banks offered a 15 per cent increase in salary and allowances. This revision was effective from November 2012 and valid for five years.

"Our last wage revision was applicable till October 2012. The management was waiting for IBA wage settlement which was finalised in May 2015. After this we had three rounds of negotiations and were offered a 4-5 per cent increase in our gross salary (CTC), excluding allowances. But we are demanding a revision not less than 15 per cent," Rao said.

The bank, however, said the negotiations are still on and there are some positive development towards reaching a settlement. It also refuted the officers' union claim of a 4-5 per cent increase in gross CTC.
"Negotiations have not concluded with the unions but there is a lot of progress. We offered a higher percentage increase in wages and are now awaiting their reply," IDBI Bank Executive Director (HR) GA Tadas said.
Rao said before 2009, IDBI wages were somewhere close to that of RBI staffers but the management in 2009 unilateral reduced it. In the last wage revision in April 2016, RBI employees wages were increased by 20 per cent.

"We are not asking a revision equivalent to that of the RBI, but it should not be less than 15 per cent which others in the industry have got," Rao said.
"Accordingly, the outlook on the long-term rating
continues to be negative and we are closely monitoring the bank's capitalisation profile and its efforts to raise fresh capital by March 31, 2017, which will be a key rating sensitivity," the rating agency said.
It said the bank's rating remains constrained by the continued stress on profitability and asset quality, slower pace of recovery of slipped accounts and the sharper than expected deterioration in profitability and asset quality indicators which have impacted the earnings and capitalisation profile of the bank.

The losses during the third quarter were also high on account of one-time items like reversal of unrealised interest income of Rs 725 crore on standard assets under SDR and S4A.
"In our opinion, the bank's earnings profile is likely to remain weak over the medium term given the high NPA generation rate, relatively elevated size of the standard restructured book and relatively high un-provided NPAs," the agency said.
The bank's asset quality has seen impairment in the last few quarters following the RBI's asset quality review (AQR) in the second half of the financial year 2015-16 and subsequently the continued slippages during the nine month of the fiscal 2016-17.

The bank's gross NPAs increased from 5.88 per cent level as on March 31, 2015 to 10.98 per cent as on March 31, 2016 and further to 15.16 per cent as on December 31, 2016, while the standard restructured advances remained elevated at near 6 per cent as on December 31, 2016.
Despite the limited growth in the bank's advances, weakening asset quality has resulted in an increase in risk weighted assets and further weakening of capitalisation as reflected by CET I capital levels of 7.24 per cent as on December 31, 2016 as against 7.98 per cent as on March 31, 2016.

Given the pressure on asset quality, and declining CET I levels, the bank's ability to prevent further slippages, increase resolution of stressed accounts and raise equity capital in the next few quarters will be key rating sensitivities, it said.