Money & Banking

Outsourcing of cash management: Kerala HC tells SBI to maintain status quo

V Sajeev Kumar Kochi | Updated on December 03, 2018

The Kerala High Court has directed State Bank of India to maintain status quo on its decision to outsource currency administration and cash management to third-party service providers in the Kerala circle.

The court direction follows a writ petition challenging the bank management’s move to outsource core functions, including that of currency chest administration.

The petitioners, State Bank Staff Union, Kerala Circle, submitted that the management and Circle Development Officer, Local Head Office, Thiruvananthapuram, have decided to outsource the functions of the currency chest management and cash administration to a third party, which is in absolute violation of the principles enumerated in the SBI Act, 1955. If the currency chest, and its management, are outsourced, the confidentiality, credibility and security intended by virtue of the legislation would undoubtedly be defeated, it was pointed out.

According to M Sasindran, counsel for the petitioner, the process of currency administration is one of the integrated businesses of the bank and a core function. It involves cash sorting, management of solid currency, collection of money from branches, and management of the currency chest. In SBI, currency management is done in an organised manner by employees who are recruited in strict adherence to legislative mandates.

Now, through the process of outsourcing, the management is trying to induct people not through direct recruitment, but through agencies, which is not supposed to follow the principles enumerated in the recruitment policy adopted by SBI.

RBI guidelines state that the bank that chooses to outsource financial services should not outsource core management functions. The HR handbook strictly prohibits outsourcing of the currency administration cell due to the fact that it would affect internal control, business conduct, and reputation of the bank, he said.

Published on December 03, 2018

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