Keep banks open

Rotation of staff can be considered

Bank unions seem firm on their plan for a three-day strike starting September 28. The appeals from the Department of Financial Services, which is under the Union Ministry of Finance,  the Indian Banks’ Association,  and bank managements have not persuaded the unions to call it off. The United Forum of Bank Unions, along with some public-sector bank (PSB) associations, supported by regional rural banks, is essentially demanding a five-day work week and the withdrawal of the performance-linked incentive (PLI) scheme. The unions have also threatened an indefinite strike starting October 26 if their demands are not met. The government has decided to put the PLI in abeyance, but the unions are unmoved on the five-day work week. 

At one level, the bank unions’ demand for a five-day work week is understandable. The Union government works for five days a week, and so does most of the corporate world. However, banking is an essential service. It’s worth noting that the entire country doesn’t shut down for two days every week. A large number of business establishments work on weekends, and it is worth debating whether their banking requirements are important or relevant to the lenders. To be fair, many banking transactions now happen through electronic channels. However, it is also true that a lot of small and medium businesses deal in cash for one reason or another and need banking services for withdrawals and deposits. Postponing transactions for two days may entail costs for businesses. Furthermore, many individual customers have only Saturdays if they need to visit a bank branch because they themselves work the rest of the week. Thus, it appears that bank unions have not taken into account the needs of the customers they serve. Also, banks have shifted to a five-day week in the second and fourth week of the month. It is worth finding out how this affects customers, particularly merchants and small businesses. 

Overall, in principle, the case for a five-day banking week appears feeble. However, the point of view of the unions and employees also needs to be taken into account. Thus, there is a need to find a middle path. What can possibly be done is that banks consider rotating the employees over the week and remain open for business on Saturdays. It will help address their demand for a five-day week while keeping the banks functioning for six days a week. This might lead to some increase in employee cost, but with greater adoption of technology and increasing efficiency, it could easily be absorbed over time. These details can be decided through negotiations among stakeholders. 

It will also be advisable to discuss the implementation of the five-day week, preferably with staff rotation, along with the PLI for PSBs. The opposition to the PLI is hard to justify. There could be specific objections to how it is proposed to be implemented, which may be addressed, but asking for a complete withdrawal should not be acceptable. Banks, at the end of the day, are commercial organisations and the taxpayer foots the bill when PSBs don’t do well. They were recapitalised to a large extent by the government in the last decade, partly through recapitalisation bonds. India should not go back to such a situation again, and for that PSBs will have to perform. Overall, the unions would do well to continue negotiating with the government to arrive at a solution that takes the interests of all stakeholders into account. Bank strikes in one of the world’s largest economies would send a negative signal and must be avoided.