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Over 10,000 employees went on strike on Monday, paralysing the functioning of branch offices around the country. They are set to target the privatisation of IDBI Bank, which these very employees have helped keep alive under the government. For the workforce, the problem is straightforward: They’ve carried the bank through its lean times and will it be they who are hit when it swaps hands?
Quick Facts on IDBI Bank Privatisation
- Action: 2-day strike by the United Forum of IDBI Officers and Employees across the whole of the country
- Speakers: 100+ speakers, 500 panellists and moderators
- Public rescue funds: Funds from the Union government and LIC (RLI) of over ₹46,000 crore.
- Huge profit: Cumulative net profit is more than ₹30,100 crore in six years
- Gross NPA: Down from 31.78% (2018) to 2.30%
- Net NPA: 0.16%
- Capital adequacy ratio: 26.38%
- Provision coverage ratio: 99.31%
- Seller: Canada’s Fairfax Group
How the Workforce Held the Bank Together
The Reserve Bank of India’s stringent Asset Recognition policy took a massive toll on the banks, and between 2016 and 2020, the banks incurred massive losses owing to the huge reckoning of bad loans. This has been saved by the government and LIC with public money. Unions claim that a financial rescue wasn’t in the cards. Staff maintained branches open, put out anxious depositors while protecting the trust of customers as the balance sheet bled.
What Employees Fear From the Sale
Union chiefs say that a bank in this condition shouldn’t even be on the market. They also have concerns regarding the value:
- Job security: Worry that a strategic sale may result in restructuring of the workforce or consolidation of branches, or pressure to leave.
- Pay and benefits: Vague about whether current salary and benefits will continue under the new owners.
- Labour rights: Issues relating to conditions and protections of services.
- Transparency: Unions argue the valuation does not reflect the true value of the bank and the process is not transparent.
The concerns echo a broader discussion about the portion of the banking sector’s jobs that are likely to be at risk every time a public sector lender transitions to the private sector.
The Numbers Behind the Anger
The gross NPAs have been reduced, and the capital buffers are high. Staff report that this is because the turnaround was due to public support and staff effort rather than a private owner. To their way of thinking, the people who repaired the asset get no guarantees and selling now gives a repaired asset to a buyer at a discount.
What Happens Next
The strike is indicative of organised bank unions’ opposition, which is likely not to go away quietly. The government’s response, either in the form of written pledges on employment or its insistence, will help determine the level of smoothness in the deal’s progress. The major factors that IDBI Bank Privatisation will be focused on are:
- The terms of a sale of the business do not provide for any formal protection for existing staff.
- A new valuation or clarification of valuation
- If talks stall, it is suggested that further union action be taken.
Conclusion
The privatisation of IDBI Bank is a matter of more than just ownership. It poses the question of whether those who helped save a bank should have a role in its destiny. The debate over the security of the jobs of the IDBI Bank employees will probably continue till they receive concrete assurances.
FAQs
What will happen to the employees of IDBI Bank after privatisation?
This will depend on the final selling conditions. Unions are demanding binding protection on work, wages and service conditions, but no union has so far confirmed that it will seek such protection.
Why is privatisation of IDBI Bank not in favour of the employees?
The sale undervalues the bank and provides workers with few, if any, protections, they believe, while the recovery is paid for by public funds and the staff’s commitment.
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