When a corporate merger takes place, there are always sticky issues of discrimination that come up. It’s natural for people in the acquired entity to feel like stepchildren, and the acquirer has to tread warily. State Bank of India has, however, managed to trample on many toes by sending out a letter asking employees of five erstwhile associate banks to return the compensation given to them for overtime work during the days of demonetisation in late 2016.

Over 70,000 officers and employees became part of the SBI when its five associate banks — State Bank of Patiala, State Bank of Hyderabad, State Bank of Mysore, State Bank of Travancore and State Bank of Bikaner and Jaipur — were merged with it on April 1, 2017.

The letter in which SBI has instructed its various zones to recover the ‘compensation’ given to officers of its associate banks for overtime work has led to questions being raised about differential treatment among employees, post-merger. SBI employees haven’t been asked to return the money.

“ Agar wapas lena tha toh diya kyon ? (If you wanted to take it back, then why did you give?),” said a bank employee who had to return the amount. Shouldn’t a merger mean taking on the liabilities as well as the assets?

Ill-timed move

When questioned, officers in the Finance Ministry said that it was an operational matter. “Besides, if it is honorarium, then the banks themselves know how to deal best with it,” an official associated with the Ministry said.

In a letter dated July 18, SBI officers’ union came out in support of the officers of the associate banks on the issue of recovery of demonetisation compensation. The union felt that moves like this would create discrimination among the employees.

The letter written by the All India State Bank Officers’ Federation to the Deputy Managing Director and CDO of the SBI said that the amount involved is very small, but a cost-benefit analysis vis-à-vis the sentiments that it can affect shows that the latter will far outweigh the small cost involved.

The compensation was different for each circle: for officers, it was as high as ₹30,000, and for clerical and other staff, ₹17,000. The amount was paid as ‘out of pocket expense’ between March and May, 2018.

While some officials wanted to downplay the issue, stating that both the management and the employees are making efforts to amicably resolve it, the incident does bring to fore the challenges of synergising the work cultures of distinct entities. Any mis-step can lead to loss of goodwill.

The government’s silence on the issue has only alienated workers more. Ashwani Rana, Vice-President of the National Organisation of Bank Workers, says, “There are two or three issues here. There is an issue of no proper re-imbursement; there are instances of some people claiming it twice; and many banks have not given the overtime to all employees. A situation like this is happening because the government is not taking up the cause of the bank employees.”

Whatever be the case, all are agreed that the action was not in good taste. Aashish Chandorkar, a public policy commentator, says: “Retrospective orders are not good from a corporate governance perspective, there can always be a provision aligned with the best practices for future. Undoing incentives with back-dated effect impacts employee morale.”

He adds, “Employee incentivisation should be clearly spelt out. This is an area to be addressed as per the Indradhanush framework. Greater professionalism across the ranks is important.” (Indradhanush framework was a comprehensive plan for revamping public sector banks, announced in August 2015.)

Macro issues

While the reimbursement issue is a relatively minor one, there are larger issues looming ahead. All India Bank Employees Association General Secretary C H Venkatachalam says, “Today more and more contractual jobs are being preferred to regular jobs, also compassionate appointments — many genuine cases are going unheard. The macro issues need to be addressed along with the rest.”

Ashwani Mahajan, National Co-Convener of Swadeshi Jagaran Manch, an affiliate of Rashtriya Swayamsewak Sangh, feels that corporate governance issue is not just restricted to banking sector. There has to be clarity and things examined from a larger perspective post merger, he said.

As Chandorkar sums it up, an audit of finance, legal, HR practices, and harmonisation with best practices in the industry, coupled with uniform application of processes when M&As happen, will become very important if the government embarks on the stated aim of having fewer public sector banks.

Amidst all this, the banks need to remember that people are intangible assets and have to be nurtured with care.

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