Finance Minister Nirmala Sitharaman (File Image)
A meeting between bank employee unions and senior finance ministry officials to discuss the government's plan to privatise public sector banks ended in an impasse, as both sides failed to find a common ground, a bank union leader has told Moneycontrol.
Unhappy over the privatisation move, the All India Bank Employees Association (AIBEA) has warned that 10 lakh bank employees and officers would go on strike on March 15 and 16, 2021. It would be followed up by an indefinite strike. The government wants employee unions to withdraw the strike call.
The United Forum of Bank Unions (UFBU), an umbrella body of bank employees in India, met the finance ministry official in the presence of the additional chief labour commissioner on March 4 via an online meeting, UFBU convenor CH Venkatachalam said.
The finance ministry officials said no concrete details on privatisation had been worked out and asked the unions to withdraw their strike call but the unions insisted on an assurance that the government won’t go ahead with the privatisation plan, Venkatachalam. The two sides will meet again on March 9.
Additional CLC SC Joshi presided over the meeting, while the finance ministry was represented by Director SR Mehr.
Venkatachalam told Moneycontrol that he wasn't too optimistic about the meeting on March 9. “Since the government is clear on their privatisation policy, I do not expect any positive outcome in the next meeting but we will meet them for discussions,” he said.
Finance Minister Nirmala Sitharaman in Union Budget 2021 announced the plan to privatise two state-run banks without giving their names. There is speculation that Bank of Maharashtra, Bank of India, Central Bank of India and Indian Overseas Bank are being considered for privatisation in the first phase.
Also read: Analysis | PSB privatisation: Will there be takers for NPA-ridden government banks?
While implementing the privatisation plan, the government will have to find a way to reach out to the trade unions, which have a significant say in industry affairs. The unions are worried that privatisation will lead to job losses.
The last time PSB privatisation came up for discussion was in 2014 when the RBI-appointed PJ Nayak panel submitted its report, reviewing the governance of bank boards in India. Advocating that the government should bring down its stake in PSBs, the panel, under PJ Nayak, a former Axis Bank chairman and CEO, explained a raft of benefits associated with such a move.
It said given the lower productivity, steep erosion in asset quality and demonstrated uncompetitiveness of public sector banks, the recapitalisation of these banks would impose significant fiscal costs on the government. But trade unions strongly opposed the move.