Why bank unions are going on strike

Why in the News

The United Forum of Bank Unions, claiming seven unions and around 90 percent of banking employees, has called a three day nationwide strike from 28 to 30 September, with an indefinite strike threatened from 26 October. The demand driving it, a five day banking week, has already been accepted by the banks’ own representative body and sent to the government. The strike is aimed at a decision the employers cannot take.

What are the four demands?

1. Five day banking week: All Saturdays should become bank holidays, so branches work Monday to Friday.
2. Performance linked incentive scheme: The government’s revised incentive scheme should be changed, because it rewards only the senior grades.
3. Bilateral discussion on that scheme: The scheme should be settled by negotiation with the unions, not by a government order.
4. Pending issues: Items left outstanding from earlier wage settlements should be closed.

Why has the five day week not closed?

1. What it would change: Branches now close on the second and fourth Saturdays, and the unions want every Saturday closed, with weekday hours lengthened so customer hours do not fall.
2. The employers already agreed: The Indian Banks’ Association, the representative body of banks in India, accepted the demand and sent it to the government more than two years ago.
3. Why bargaining cannot finish it: Pay and hours are set by bipartite settlements between the unions and the banks. A bank holiday is notified by government under the Negotiable Instruments Act, 1881.
4. The government’s position: The finance ministry says the proposal remains under consideration with several stakeholders to be weighed, and has asked the unions to defer the strike.
5. The takeaway: A demand both sides at the table have settled cannot be implemented, because the authority that decides it does not sit at the table.

Why is the incentive scheme contested?

1. What the scheme is: The performance linked incentive was introduced in the 2020 wage settlement and paid staff according to their own bank’s performance.
2. What the revision did: A revised government scheme covers Grade 4A officers and above, so the lower scales get nothing, which is why officers’ associations opposed it.

What will the strike disrupt?

1. Timing is the pressure point: The strike ends on 30 September, the half yearly closing date, when banks must close their books for the half year.
2. Branches carry the impact: Cash deposits and withdrawals, cheque clearing and account related work at public sector branches face disruption.
3. Where service continues: Unified Payments Interface, internet banking and automated teller machines are expected to keep running, and private bank branches to function largely as usual.
4. Sunday opening to shorten the gap: Public sector and regional rural banks opened on Sunday, because a weekend followed by three strike days would close branches for five days running.
5. Contingency steps: The finance ministry has asked banks to keep automated teller machines stocked, and banks have advised customers to finish time sensitive work early.

Challenges

1. A settled bargain with no closing authority: Bipartite settlements can agree hours, but only government can convert them into a banking holiday, so agreement alone changes nothing.
2. Incentive design splits the workforce: A scheme confined to senior grades sets officers against clerical staff inside the same union platform.
3. Digital channels reduce the strike’s reach: With most retail transactions on the Unified Payments Interface and automated teller machines, a branch strike reaches fewer customers each year.
4. Rural branches absorb the gap: Cash dependent customers have no digital substitute, so a branch closure falls unevenly. Eg. regional rural bank branches.

Way Forward

1. Give the proposal a dated decision: The finance ministry should fix a deadline for deciding the five day banking proposal.
2. Bring the notifying authority into the talks: Since bank holidays are notified by government, involve the Department of Financial Services and State governments before a settlement on working days is signed.
3. Extend the incentive across scales: Link the incentive to bank level performance for every grade, so the scheme does not divide the workforce it motivates.
4. Agree an essential services protocol: Settle with the unions which functions continue during a strike, covering cash logistics and cheque clearing.

Conclusion

A demand the employers accepted cannot be delivered by the employers, because the working days of banks are fixed by government notification rather than by a wage settlement. What to watch is whether a decision arrives before the indefinite strike the unions have threatened.

Matching Previous Year Question

“[2024, GS3, 15 marks] Discuss the merits and demerits of the four ‘Labour Codes’ in the context of labour market reforms in India. What has been the progress so far in this regard?”