The Hindu Business Line : Banking on negotiations

The one day strike by the officers of State Bank of India (SBI) and its associates on Monday once again brings into sharp focus the differences between the unions and management on just how to face the challenges of competition. The primary cause of the conflict and the current strike is the opposition of the unions to the proposed merger of SBI with its affiliate, State Bank of Saurashtra. The amalgamation was one of the major financial reforms the Finance Minister, Mr P. Chidambaram, spoke of after the trust vote. Soon thereafter, an order was passed for the merger. The unions are clinging on to the objection they held out even before the bank chiefs agreed formally to the merger in January this year. Now that the proposed marriage seems almost certain the unions are still clinging to their age old pressure tactics. And that is a pity.

Even before the January decision, the unions were given time to consider their options and suggest changes that could have protected, if not enhanced, the service conditions such as tenure and promotions of the employees from both banks. Most employees of the units being merged understandably suffer anxiety over loss and uncertainty. The easiest option for the unions so far has been to simply refuse amalgamation, when it might have been a far better gambit to negotiate deals to enhance the value for employee-members, a negotiation that the merger environment favours. Since management interests far outweigh those of the employees, the latter can negotiate to the hilt during the merger period and that is what the unions should do instead of striking work as they did on Monday and as they are threatening to do again.

The merger will help SBI compete better in an environment increasingly characterised by size and the level of sophistication of the services on offer. Public sector banks will therefore require fresh skills and knowledge of new delivery channels and products for a variety of clientele. In other words, specialised skills, not generalised banking, will be the order of the day. The sooner the unions realise this, the better for their employee-members. The issue here is the shifting pattern of banking services. Financial reforms, many of which the unions opposed, have altered the balance of power. Nationalised banks still account for more than 47 per cent of gross bank credit and aggregate deposits but the private banks are muscling in with newer services and products and, more pertinently, new skill requirements. Changes in union perspectives therefore brook no delay.

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Cabinet okays SBI, State Bank of Saurashtra merger

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