Liquidity Woes
India’s banking sector is grappling with a significant liquidity crunch, one that threatens not only financial stability but also the broader economy.
In a bid to discourage strikes and protests in banks in the coming times, the government has decided to keep the banking industry as a public utility service for six months till October 21.
The Department of Financial Services, in a circular dated April 20, said the labour and employment ministry through a notification has declared “banking industry as a public utility service” for six months with effect from April 21.
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The decision has been taken under the provisions of the Industrial Disputes Act. Now that banking services are under this Act, it simply means that the banking sector would not see any strikes by employees or officers during the operation of the law starting from the date of implementation.
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The labour ministry issued the notification on April 17 against the backdrop of the coronavirus pandemic, which has significantly impacted economic activities.
The Department of Financial Services’ circular has been addressed to the RBI Governor, SBI Chairman, Managing Directors and CEOs of nationalised banks, and the CEO of Indian Banks’ Association (IBA).
There are over a dozen employees and officers unions in the banking sector. These unions enjoy a considerable say in wage negotiations, which the IBA deals with every three years.
All public sector banks, old generation private sector banks like HDFC Bank, ICICI Bank, Axis Bank and Federal Bank are members of IBA. Some of the oldest foreign banks – HSBC, StanChart and Citibank are also part of it. All of them come under wage settlements and other employee issues that are taken up by IBA.
New generation private sector lenders like Kotak Bank, IndusInd Bank and Yes Bank are outside the purview of IBA norms.
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