Why Bank Strike On 20th December?

Sri Sankaran Srinivasan says on Proposed Strike in Bank

Banking exposes us to all aspects of human life. But what is it does not teach us, is the fact that outside the  Bank, we are no body. We deal with people from a position of Banker, but not when we are like any body else – “the common man,”. It is in crisis, such as strike, struggle that we learn to tackle people from the position of common man.

Agreed that strike is painful labour without wages but it will deliver fruitful result not only in the form of pay wages, but also in the form of self-development and recognizing our hidden strength. It also enables us to introspect and remodel – we get an opportunity to show our subtle potentials. Those of us who remain dormant, either because of overwork or otherwise, get a chance to show our talents in various fields. The responsibilities relegated to us help us to develop our personalities. The strikes have given us an excellent opportunity to reaffirm our status. The status, which will grow forever.

During the  phase of strike one  experiencesthe incredible. But one dares to do the things, which he/she would not have dared in a lifetime.

The struggle and strikes have given us strength, power, and lion heart to combat every battle of our lives. Times will change. The future generation of Bank Employees may not even remember us, but for me, this experience is a bouquet of ever-fresh memories of things, which we gained and lost in this struggle. This phase will pass away. But the struggle will never end.

WHY WE OBSERVE STRIKE ON 20-12-2012

on the following issues:

1. To protest against the attempts of the Government to hurry up with the proposed amendments to the Banking Laws
2. To oppose attempts of grouping the Banks for functional co-ordination with a view to ultimately merge the Banks

The dangerous imminent.  Government is all set to amend the Banking Regulation Act any time.  Be prepared to fight.  Be prepared to observe instant strike anytime at the call of NUBU.

We have already conveyed to you though  our SMS  the need for getting ready for an INSTANT STRIKE at short notice since the Government appears to be taking steps to get the Banking Laws (Amendment) Bill, 2011 passed in the current winter session of the Parliament which is ending on 20th December, 2012.  

With a view to enhance the awareness of  the membership  to make their conviction resolute and firm  we give asunder the implications of some oft the amendments to the Banking Laws (Amendment) Bill, 2011 being placed in the floors of parliament.

Changes Proposed In the Banking Laws (Amendment) Bill:

 1). “1. Amendment to the Banking Companies (Acquisition and Transfer of undertakings) Act, 1970/1980, sub-section 2(E), suggests that the ceiling on voting rights of share holders of Nationalized Banks, will be raised from the present 1% to 10%.

Section 12(2) of the Banking Regulation Act, 1949, as it stands at present, provides that no person holding shares in a private Bank shall exercise voting rights in excess of 10% voting rights of all share-holders taken together.

• In other words, this Section placed a cap on the voting right of a share-holder. The newly introduced Bill seeks to delete this Section altogether.
• This means, the cap on voting rights, in the case of individual share-holders of Private Sector Banks, shall be removed.
• With 74% FDI allowed in Private Sector Banks, any foreign entity holding more than 50% shares, and therefore controlling more than 50% voting right as a result of removal of the cap, shall be at liberty to take over, at will, the management of any Private Bank.
• This will result in our Banks being swallowed and monopolized by foreign capital. The total capital of the 28 Private Banks in our country is only around Rs.3500 crores whereas the Deposits in these Banks are more thanRs.3,50,000 crores. People’s money will be exposed to manipulation and speculation by foreign capital.

2) Exempting banking sector from the purview of Competition Commission to speed up merger processes.

• Section 2 of the Bill seeks to exempt all Banks, whether Private or nationalized or Gramin or Co-operative, from all scrutiny or control or regulation or supervision or restriction, in respect of merger, acquisition and amalgamation.
• Under the existing provisions of the Competition Act, 2002, the Competition Commission of India has power to scrutinize and regulate acquisitions/ mergers/ amalgamation/ absorption of companies including Banking Companies; the Bill seeks to exempt mergers of the banking companies from the applicability of the provisions of the Competition Act, 2002.

NUBE’s Stand

Timing with last General Election to Loksabha, the FM instructed the Chief of Public Sector Banks during January 2005 to create a favorable atmosphere through a dictated national debate in the media on the subject. Being inspired or to please or appease the FM, recently 3 banks i.e. Oriental Bank of Commerce, Indian Bank and Corporation Bank, have formed an OIC Association in the name of strategic alliance to share each others market, assets, business, branches, technology etc. MOI has been signed with detailed guidelines for functioning and operating as one entity. Now Finance Ministry preparing the ground for consolidation among public sector banks (PSBs)? Its recent missive to the 26 PSBs seems to suggest so. The 26 banks have been divided into seven groups. SBI has been given the responsibility of co-ordinating the functioning of its five associate banks. PNB is the co-ordinator for Dena Bank and Vijaya Bank, BOB for IDBI Bank and UCO Bank, BOI for Oriental Bank of Commerce and Andhra Bank, Union Bank of India for United Bank of India and Punjab & Sind Bank, Central Bank of India for Indian Bank, Allahabad Bank and Bank of Maharashtra, and Canara Bank for Indian Overseas Bank, Syndicate Bank and Corporation Bank. The group coordinators of the banks would interact with the Ministry on a quarterly basis. The real intent  of consolidation is downsizing Public Sector Banks (PSBs) in terms of manpower and Branch-network to facilitate easy privatization. This is cartelization in Banking Industry and to develop synergies in functioning and ultimately to take step for merger. It is a prelude to merger. Now banks have also started to explore possibility of forming such alliance. NUBE is opposed these moves as this is also one form of cartelization precursor for consolidation i.e., forming an alliance to deal with a business.

OTHER AMENDMENTS :

3 Section 5: Re-definition of securities:
“Approved Securities issued by the Government or such other securities as approved by the Government”.

This amendment will result in dilution and liberalization of the present meaning and definition of securities. We should not forget that it is the people's hard-earned savings deposited in the Banks, which are basically invested in the approved securities including Government securities. If the amendment is through, the people’s huge savings may be invested in all types of Private securities floated by unscrupulous business houses and corporate bodies. Hence, the NUBE is opposed to the re-definition of “securities”.

4 Section: 12-B: New addition:

“RBI to be given powers and discretion to allow acquisition of more shares holding by any one along with voting rights”.

1. We have already opposed deletion of section 12(2), which envisages removal of the existing ceiling of 10% on voting rights of share holders/investors, as it would result in combination, cartelization and easy control over the Banks.
2. This will expose the existing Private Sector Banks to the risk to take over by FDI as well as Corporate bodies. Therefore, once if the ceiling on investment and voting rights is defined, RBI should not be given any power and discretion to allow acquisition of further capital by the same investor.
3. If given powers and discretion, RBI may wilt under various pressures and allow capital investment up to the maximum permissible limit of 74%, which will facilitate take over by Foreign Investors. Hence, the NUBE is opposed to this proposed amendment, which will do away with the shield against the take over bids by foreign entities.

5. Section 36-ACA (1): New addition:

“RBI can supersede the Board of Directors of any Bank for a period of 6 months to one year and appoint an Administrator to run the Bank”.

1. This amendment provides additional and over-riding extra powers to RBI. It is pertinent to note here that the existing powers of RBI are quite adequate as in every Bank there is a nominee of RBI, who are a witness to the ongoing developments in the Bank, as without their knowledge, nothing can happen suddenly, warranting super-cession of the Board of Directors.
2. Similarly, handing over Banks to Administrators will not be of any help, as it may lead to arbitrariness, unilateralism. The NUBE is opposed to this undesirable amendment.

6. Section 2A: Substitution:

“Minimum authorized capital to be increased to Rs.3,000/- crores and powers to RBI to allow increase in authorized capital to any amount”.

1. The Bill seeks to provide for uniform Authorised Capital of Rs.3,000/- Crore for all Nationalised Banks.
2. This would pave the way for ultimate privatization through further public issue and, thus, reduction in the ratio (percentage) of Government share-holding in those Banks.
3. This amendment will pave the way for further public issue by the Public Sector Banks, thus may lead to reduction of Government holding as percentage of total capital and consequently may lead to their privatization.

4. This amendment is intended to make Banks more capital intensive and further to facilitate merger of Banks.

7) Bank Borrower to become Bank Directors:

Another proposed amendment is the adding of Section 20 (6) to B R Act which will enable the RBI to exempt Banks from the present condition which prohibits Bank Directors to be borrowers of that Bank or Bank borrowers to be Directors of that Bank.

By this proposed amendment, Banks can give loan to a company in which a Director is interested and a borrower including a NPA borrower can become a Director of that Bank.

The NUBE opposes this change and its apprehension is justified by the fact that the Government  has refused on the floor of the Lok Sabha to give any firm assurance that the Government holding in Public Sector Banks will not be reduced below 51% in the days to come.

Comrades to the vanguard !

The Financial Express of Thursday, 13th Dec 2012, carries a news item stating that “Hon’ble Finance minister Sri.P.Chidambaram on Wednesday held out an olive branch to the Opposition on key reform Bills listed for passage in the current session of Parliament, discussing the issue with two senior BJP leaders. Sri.P.Chidambaram later claimed to have reached an understanding with the two leaders on the “urgent need” to get these Bills approved by the House and indicated a consensus was in sight on the banking regulation Bill. With only six days left to go in the winter session, Sri.P.Chidambaram's initiative is seen as a last-ditch effort to push through financial sector Bills, particularly those relating to the banking, insurance and pension sectors”.

The gravity of the situation therefore need not be inflated, exaggerated or overstated because the attempts are visible.  On the one hand, the Government is moving to get the Bill passed.  On the other hand RBI has announced its Draft Policy on giving licence to Corporates to start more Private Banks.  Further, the Planning Commission is suggesting reduction of Government Capital in PSBs to less than 51%.  There are multiple attacks to liberalise our Banks and push their reforms agenda.  There are visible plans of consolidation of public sector banks in the anvil once the draconian bill amended.

That is why the situation is serious.  The above amendments should be opposed tooth and nail, otherwise the Public Sector Banks which have played a very important role in the economic development of the country, will be poached by the Corporate capital and Foreign Investors.

The fallout of these amendments will be on the common people, who solely depend on the Public Sector Banks for their financial needs

That is why NUBE has given the call for STRIKE ON 20-12-2012 if Government will take up the Bill in the Parliament for approval.

So Get ready for strike on December 20, 2012. Strike as verb. Strike t the root these  draconian amendments  with the disdain and contempt it deserves .

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