Several public sector banks that are coming up with Employees Share Purchase Schemes (ESPS) are asking their staff to buy a particular amount of shares to ensure that the process sails through smoothly.
Over half a dozen public sector banks have started the process of employee share purchase schemes, while some others have completed it. Some of the banks that have announced or completed the process are Indian Overseas Bank, Bank of Maharashtra, Union Bank of India, Syndicate Bank, Vijaya Bank, Bank of India, UCO Bank, Andhra Bank among others.
Informal communication
Employees of some of these banks whom The Hindu spoke to said there had been a mandate to buy the shares. They, however, added that there was no formal communication in this regard.
According to an employee of a mid-sized public sector bank (PSB), those above a certain rank had been asked to buy 10,000 shares. Similarly, a large PSB had asked its clerical staff to buy about 1,000 shares, while higher rank employees had been asked to buy 10,000 shares.
Last year, when another large PSB came up with such a scheme, its general managers were asked to buy 7,000 shares each. To ensure they participate in the scheme, all these banks have asked their employees to open demat accounts. “We have been instructed to open demat accounts. While the management has not specified the reason for such an order, we all know this is because the bank is coming out with an ESPS scheme,” said an employee of another public sector bank. Some of the banks have also extended personal loans to their employees to buy the shares.
“We understand that banks are forcing staff members to open Demat Accounts, expressing intention to issue shares to all the staff members under Employee Share Purchase Scheme,” said Devidas Tuljapurkar, general secretary, All India Bank of Maharashtra Employees Federation.
In March 2017, the government had allowed public sector banks to offer stock options to their employees, which was mainly aimed at retaining experienced hands and better incentives, apart from raising capital.
Trade unions have opposed the sale of shares to the employees.
“Recently some of the public sector nationalised banks have come out with the decision to augment their capital through sale of shares to employees. As part of our decision to oppose all methods of privatising the capital of nationalised banks, we have been opposing sale of banks’ shares to private hands, both corporate and individual,” said C.H. Venkatachalam, general secretary, All India Bank Employees’ Association.
“In the same breath as a trade union, we are opposed of sale of bank capital to employees,” he added.