The Hindu Business Line : `Banks must drop independent transfer pacts'

Mr Leeladhar has a good rapport with his staff, especially the labour unions. It is ironical therefore that he should now be gearing up to face an industry wide strike a few weeks from now, called by labour unions to protest the deadlock in wage negotiations. Mr Leeladhar says that bank managements are very keen that the issue of freedom to transfer clerks is settled this time. He says bank managements are willing to be flexible on the financial matters - but that's an argument that the unions are still refusing to buy.

Asked about the lessons that he has absorbed in his career, he says, "We have a wealth of talent in the public sector - people who are capable of doing their best. It is only a case of identifying them and seeing that they are not in wrong postings".

He has completed four years as CMD in Union Bank of India and still has a year to go. When asked to comment on the market talk that he is tipped to be Deputy Governor, RBI, all that he offers is a laugh.

Excerpts from an interview at his office in Mumbai, a fortnight ago.

The unions have called for a strike on August 24 over wage negotiations. What is your response?

It's about 2 years since we started negotiations. We started with every intention of completing within 6 months since the last time it took two and half years. Even the unions were keen. This time there is a total change in the banking scenario, particularly after the huge investment in IT. We are now talking of single window, where a person sitting at the counter will do everything. There will be a lot of change in the way the clerks work. No manual intervention is required. Because of all these things, we thought we should try to dovetail the working functions to the needs of the hour. The first few rounds of talks we used for giving them an idea of how a branch will look in the new environment. They also took a lot of interest.

What are the issues stalling the progress of the talks?

The main issue today is mobility. Each bank has entered into an independent arrangement with their unions where their movement is decided. Now there are banks where you cannot move people even to nearby offices. We have islands where we have surplus staff - especially in metros, while we have deficient places in rural areas. We have to augment staff in these places. There will now be only one agreement at the central level. We have said that they should not enter into any independent agreement with the local managements.

Now there is a Shastri Award, by which a bank management can transfer clerks anywhere within the same language area. If that is implemented, then clerks can be transferred anywhere in North India. Hindi is the common language all over the North. In spite of this, because we entered into independent agreements, our hands were tied.

What is wage increase the management is willing to agree to?

The unions started with a 30-35 per cent increase. They then brought it down to 20 per cent. We took a different stance.

We would usually work it out like this. We look at the total establishment cost of all banks in the system and then decide on a particular percentage of this amount - it was 12.25 per cent. This time we said that we would not follow that principle because 1,05,000 people had taken VRS in the meantime. If you go by that figure, and give 12.25 per cent, each one will get so much more.

We are willing to pay Rs 1,400 crore. About Rs 1,350 crore was paid last year for a larger number of people. We should have the prerogative to decide on computerisation and mobility. The main issue is mobility. We should be able to get our way in this - be able to move people within a State at least, for starters. Then we will be liberal on the financial matters.

How much would banks have provided for the wage increases in their books?

Each bank has been providing for the last three years. If you take my bank, we have provided for 12.25 per cent in fact every quarter, we have been providing this amount. Now unions have threatened a day's strike. We have to meet it squarely.

Is doubling agri-credit within three years a realistic target? Why have banks been unable to reach the 18 per cent target for agri-lending?

Most banks have reached this target. Our bank has exceeded the target for last three years. Now we are going to increase it to 30 per cent per year and that should automatically help double the credit within 3 years. Now the Agriculture Ministry is saying that the outstanding loans should be doubled in 3 years. That will be difficult to achieve.

If you take infrastructure, if we were to finance a Rs 100 crore loan, to scout around immediately for Rs 18 crore for agriculture, becomes virtually impossible. Especially, if such disbursals happen in the last quarter, as they usually do. Where do we run for such agricultural loans? So to achieve a target of 18 per cent, based on a level that I am not sure of at the beginning of the year, becomes difficult. But so far as disbursements are concerned, we can do what is required. Suppose we take paddy, it gets cleared in 6 months, so we give two crop loans. But these loans may not come in the March outstanding. But if you look at disbursals, it has gone to agriculture.

How about bringing 100 new farmers in each branch?

It is now 100 new farmers on the average. It may not be practically possible to get 100 farmers in each branch. There may not be that many people there. All who can be given loans, may have already been given. In some cases it will be low, and some it will be higher.

Would your bank require more capital if the Basel - II recommendations on capital adequacy are applied?

Actually what we have done is this. If we apply the norms in the area of investments we require lesser capital than what we have now. But on advances, which is the major issue we don't have the database. What we now do is assign a 100 per cent risk weight for all advances other than government advances. Now in Basel II it depends on rating. And rating cannot be only for one year. It has to be a trend for five years. We must see how the account has migrated. Five years back we never used to have this rating. In my bank, we have taken 3 years, gone back and given a rating for all accounts over Rs 1 crore. So today I have a database for 3 years. But that is not enough. We need data for another 2 years. If we make a calculation based on the three years data that we have, we may require a little more. But together, whatever benefits, we get, and the ploughing back profits, we may not require much.

More Stories on : Interview | Public Sector Banks

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Crude boils over

A product to trade views on inflation

Nabard to launch pilot scheme for loans to small, marginal farmers

Market gears up for repo rate hike as yields harden

Govt studying options on pvt bank voting rights

`Approve loans with caution'

`Banks must drop independent transfer pacts'