Nearly ten banks have signed a memorandum of understanding (MoU) with unions to formalise a turnaround pact. Earlier, the unions had laid out the condition that they would sign the MoU only after the details of the turnaround plan were discussed with them.
Deviating from the earlier stand, the unions have now signed a MoU with a clause stating that employees and officers' unions would be consulted before implementing the plan. Redefining the age-old management and union relationship, while unions are becoming more accommodative, banks are now more transparent in their dealings with the unions.
In the recent days, bank unions have adopted a realistic stand towards the changing dynamics of the banking sector. SBI Caps is in the process of formulating the turnaround plan for the banks.
"In the last week of March, unions signed the MoU for implementing the turnaround plan, which will be discussed with us before implementation," Rajen Nagar, president, All India Bank Employees Association told Business Standard.
"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," added Nagar.
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 the December quarter, Kolkata-based UCO Bank's NPLs were 17.18 per cent of total loans made.
The banks are expected to finalise its turnaround plan by end of April and the areas which are required to be deliberated on include: asset quality, including recovery and non-performing asset reduction, optimum utilisation of capital, sale of non-core assets, broad basing investor base, improvement of productivity and efficiency through branch rationalisation, improvement in business processes, human resource practices and policies, according to the terms of MoU.
The MoU also talks about forming a committee comprising senior management of the bank (chairman, managing director and executive director of the bank), representatives of employee and officers' union, to oversee the implementation of the turnaround plan on a monthly basis.
Notably, bank unions are no longer as strong a lobby as they used to be. They have faced a reduction in strength due to large scale retirement of bank employees in the past few years. According to rough estimates, in the past few years, the strength of bank unions has come down by at least 10,000. At present, about one million employees of banks are members in unions. However, the number of active members would be much less.
