A number of unions in India are protesting against the government’s decision to merge three state-owned banks

(Image source- Reuters)

  • The members of nine bank unions are all set to stage a strike on 26 December as part of a nationwide protest against the Indian government’s decision to merge Vijaya Bank and Dena Bank with the Bank of Baroda.
  • As a result, banking services at a number of public-sector banks will be affected, which includes ATM operations and cheque clearances.
  • The strike has been called by the United Forum of Bank Unions (UFBU) and will involve the participation of around 1 million bank employees.
  • It comes in addition to a strike coordinated by the All India Bank Officers' Confederation (AIBOC), which falls under the UFBU, in the last few days in pursuit of higher wages for bank employees.
The members of nine bank unions are all set to stage a strike on 26 December as part of a nationwide protest against the Indian government’s decision to merge three state-owned lenders - Bank of Baroda, Vijaya Bank and Dena Bank.

As a result, banking services at a number of public-sector banks will be affected including ATM operations and cheque clearances. Despite the participation of the employees of some private banks, the operations of private banks are expected to continue as normal.

The strike has been called by the United Forum of Bank Unions (UFBU), an umbrella organisation for India’s nine major bank unions, and will involve the participation of around 1 million bank employees. It comes in addition to a strike coordinated by the All India Bank Officers' Confederation (AIBOC), which falls under the UFBU, in the last few days in pursuit of higher wages for bank employees.

The government decided to merge the mammoth Bank of Baroda with the smaller regional players Dena Bank and Vijaya Bank in September 2018.

While the reasons for the move were manifold, it was mostly aimed at creating a larger bank with a strong capital buffers and helping Dena Bank, which has a non-performing ratio of over 11%, improve its balance sheet and be taken off the central bank’s Prompt Corrective Action watchlist. The merged entity will become the third-largest bank in India and have nearly 9,500 branches.

While the decision has been welcomed in some circles, it has largely been opposed by the employees of these banks. This is mostly due to the fact that the merger is expected to result in a number of job cuts, especially since overlapping departments will be trimmed down to size, and the closure of branches that are in close proximity to one another. It could also provide further room for private banks to muscle in on the market share of public-sector banks.

Separately, the Indian Banks Association (IBA), an industry lobby, has been engaged in negotiations with unions since November last year over a possible wage revision. A lack of progress led to a nationwide strike by employees at the end of May 2018.

The IBA upped its revision proposal from 2% to 6% at the end of July, but this was rejected as employees were expecting a raise along the lines of the 15% hike received in February 2015 during the last wage revision discussions. The IBA subsequently hiked its offer to 8%, which was rejected by unions on 1 December.

The nationwide strike by the bank unions is expected to lead to a higher wage offer, although the IBA won’t have much space to maneuver since public-sector banks are burdened with a lion’s share of the country’s bad loans. A higher wage hike proposal could offset the discomfort caused by the merger of the three public-sector lenders, which is expected to be completed early next year following the approval of the scheme of amalgamation last week.


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Nearly 1 million bank employees in India are set to go on strike this week
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