Reject the anti people recommendations with contempt

Raghuram Rajan Committee

REJECT THE RECOMMENDATIONS WITH CONTEMPT

One more committee in the order of Narasimham committee I and II and Verma committee was constituted very clandestinely in August 2007 with wide ranging terms of reference to go into the whole gamut of the financial sector and recommend the changes needed. The details of the recommendations came to surface only after finalization of the so called draft report through a section of the print media. The earlier committees were constituted by the Ministry of Finance; whereas this committee was constituted by none else other than the Deputy Chairman of the planning commission Montek Singh Ahluwalia whose loyalty, as is known to everyone, is more for the IMF-World Bank than our own motherland. This fact clearly reveals what would be the nature of the recommendations. Again the chairman of the committee Raghuram G Rajan, Professor, University of Chicago himself was a former chief economic advisor of the IMF. In the whole committee consisting of twelve executives, the only person from the side of the public sector was O P Bhatt, chairman of State Bank of India. His continuous public pronouncements in favour of privatisation of the public sector banks accorded him the requisite qualification and ensured his berth in the committee.

The committee held nine formal sittings and eleven informal ones most of which were hosted by ICICI Bank and then it was the same bank which provided secretariat to take care of the logistical arrangements. This again is a clear indication about the direction of the recommendations of the committee. The committee did not think it fit to consult, even informally, the trade unions representing cent per cent work force which is an important stake holder.

Expectedly the committee came out with the theoretical formulations clearly favouring continuance of the predatory capitalism and recommendations for wholesale privatisation of the public sector banks and linking the Indian economy with the Global economy without any safeguard.

In the opinion of the committee the United States sub prime crisis is no indication of the failure of the market economy; then in such case the logical conclusion would be to adopt the economic system of North Korea which is totally unacceptable to the committee. Thus the committee comes out clearly in favour of capitalism whatever may be its shortcomings and the socialist economy followed by countries like North Korea is anathema to it. Similarly the South Asian economic crisis witnessed twelve years ago, according to the committee, was not due to any flight of capital but due to poor governance, poor risk management etc. With this upside down understanding of the world economy and drawing a wrong lesson from the South Asian crisis, the committee strongly recommends for Capital Account Convertibility directly linking our economy with the Global economy unmindful of the consequences.

The committee is for discontinuation of Government ownership of the banks. It strongly feels that the Government holding in the public sector banks to be reduced to below 50%. In the meantime the committee feels that small ‘underperforming’ public sector banks are to be straightaway sold in the market. The sale can be to any organisation including the subsidiaries of the Foreign Banks. Taking experience of this, bigger banks can be sold.

The committee wants large international banks to swallow our large public sector banks. But it laments that it is politically unacceptable in the foreseeable future. The committee hints that as the present UPA Government is dependent on the Left Parties for its survival and the Left Parties are ardent supporters of the Nationalized Banking Sector, the multi national foreign banks are not allowed to swallow the public sector banks. As large public sector banks are going to exist for the present, the committee comes out with strange idea that the Boards of these banks are to be reorganized is such a way that more powers are vested with the outside private share holders including appointment and compensation of top executives to the Board. Thus the committee wants the control of the public sector banks to be transferred to private big industrial houses.

While on the one hand the committee is for selling small public sector banks, on the other hand it is for opening more and more local area private banks. At the same time the committee wants the ‘unviable’ co-operative institutions to be closed. The committee observes that in the case of Regional Rural Banks, the wage structure for RRB staff was equalized with their higher wage national commercial bank counterparts, resulting in unprofitable cost structure. Thus the committee is not in favour of public sector banks, co-op banks and RRBs and is clearly in favour of local area private banks. The whole idea is to somehow promote privatisation.

Like earlier committees, this committee is also for throwing the poor to market economy mercilessly and establishing jungle law of ‘survival of the fittest’. That is why the committee wants the interest rates on loans to the poor are to be liberalized; the low interest ceilings are to be totally removed. The committee gives a peculiar meaning to the oft-repeated terminology ‘financial inclusion’. According to the committee this term does not mean expanding credit but access to savings. Therefore the committee recommends for dispensing with priority sector loans to the rural peasants and small traders at concessionary rate of interest.

This committee further recommends for merger of public sector banks with other banks including subsidiaries of foreign banks. Thus this committee is for monstrous growth of the multinational foreign banks at the cost of the public sector banks. The committee is also for outsourcing permanent and perennial jobs of the banks through microfinance institutions and business correspondents.

The public sector banks should be removed from accountability to Parliament is an important recommendation of the committee. Another similar recommendation is to delink the banks from Chief Vigilance Commission. The idea behind this can only be to encourage frauds at the top level.

Thus this committee stands for

# merger of banks

# outsourcing of bank jobs through business correspondents

# closure of co-operative institutions and RRBs in the name of unviability

# sale of small public sector banks

# full control to private share holders in large public sector banks

# opening more and more local area private banks

# privatisation of public sector banks and merging them with multinational foreign banks

and

# Capital Account Convertibility to link our economy with global economy

Apart from these, there are innumerable suggestions and recommendations in that direction. The committee is for a hundred small steps in the direction of privatisation that would collectively go very far.

Therefore let us resolve to reject these anti people and anti employee recommendations with contempt.

The menace of outsourcing in the banking industry

Outsourcing in the Banking Industry – threats and challenges

Outsourcing has become the modern word in the parlance of the Managements be it manufacturing industry or service industry. The word outsource means “to arrange for somebody outside a company to do work” in terms of the Oxford Advanced Learner’s Dictionary. For the working class what is meant by outsourcing? The very meaning of the word is sheer exploitation of labour in its crude form. The crisis ridden capitalism finds several ways to overcome the same and comes out with newer methods to increase its predatory profits. One such method which has been ‘successfully’ put into practice is outsourcing of regular and permanent jobs in various sectors. Banking Industry in India is no exception to this.

If a job is done in totality in an industry, the cost is higher according to the industrialists. Therefore in order to reduce the cost, outsourcing is resorted to. In that process, the labour is divided, labourers are dissected into several groups so that their voice of dissent is suppressed. In the thickly populated country like ours cheap labour is available aplenty for exploitation. The managements see that the fragmented sections of labour are not organized. Thus the main motive of the exploiting class is to de unionise the working class which ultimately poses grave threat to the very existence of the capitalist system.

Banking Industry where nearly 25% of the total business is controlled by the new generation private banks, the indigenous and the multi national private banks, outsourcing is fully resorted to without any restriction. This gives them advantage in terms of profit and reduced man power and that too mostly in contractual form. Hence pressure is built on the public sector banks also to follow the suit. The successive Governments at the centre instead of checking the menace provide a congenial climate for public sector banks to adopt the same policy. Thus the disease spreads everywhere.

Almost all the core jobs are outsourced in the private sector banks. For instance credit card marketing, issuance of cards, maintenance of accounts, settlement of bills, enhancement of limits, recovery etc. are all outsourced to several agencies which absolutely do not have any interconnectivity. Thus the end users are put into untold sufferings as they are made to run from pillar to post to redress their grievances. The same methodology is copied by the public sector banks also thus plugging the decent job opportunities for hundreds and thousands of the unemployed youth. State Bank is a classical example for this. There is no Head Quarters for SBI credit card department. . No personal interaction is possible for any credit card holder to take up their grievances. Letter correspondence through drop box or post box or e mail is only possible. Resultantly letters or legal notices cannot be sent through any registered post. Thus the clients are placed in a hapless situation due to this system.

Several courts including the Supreme Court passed severe strictures against the ICICI Bank for its unlawful acts through its outsourced agents. One Shri Yadiah was reportedly done to death by the goons engaged by the ICICI Bank at Hyderabad for alleged default of a paltry sum. Shri Prakash Sarvankar in Mumbai was abetted to commit suicide and his three small girl children stood witness for the crime committed by the agents of the ICICI Bank. A youth totally unconnected with ICICI Bank was reportedly beaten on his head severely using iron rods by the ‘recovery agents’ of the same bank in Delhi in January 2007. These are a few of the crimes that have come to surface. Several hundreds have been swept under the carpet due to the money and muscle power of the Bank. The irony is that instead of booking the chief of ICICI Bank, Mr.K.V.Kamath for these criminal activities committed by their agents, he is awarded with Padma Bhushan on the Republic Day for ‘the best banker’. Earlier Mr.Ramesh Gelli, the then Chief of Global Trust Bank, which also outsourced many of its key functions, was awarded with Padma Sri for ‘innovative banker’ by the previous NDA Government. Thus the message of the successive Governments at the centre is that public sector banks also should tread the path of the new generation private banks.

Recently, the IBA has black listed 22 outsourced agencies out of which 13 have been engaged by ICICI bank and 9 by HDFC bank. The reasons pointed out by IBA for black listing are "submission of forged documents indicating dishonesty and lack of integrity, leakage of customer data, failure to meet statutory liabilities, involvement in frauds etc." Still learning no lesson from the past experience, the bankers-government combine are very adamant in outsourcing bank jobs.

The managements of the public sector banks which have already resorted to outsourcing many functions which are continuous and perennial in nature and which form an integral part of the day to day banking are encouraged by the Government to resort to further outsourcing. The cleaning of the premises, security guards for the ATMs and bank branches, issuance of credit and debit cards, filling up of cash in ATMs, data entry, filling up of account opening forms, capture of customers’ signatures, transportation of cheques to the service branch from the branches and vice versa, data entry are some of the jobs that are handled by the outsourced agents in the Banking Industry. The list is only illustrative and not exhaustive. Thus through these acts, several thousands of permanent jobs are rendered surplus in the industry.

The eighth bipartite settlement provides for outsourcing of only IT related activities where in-house capability is not available. Therefore whatever outsourcing that has been resorted to by the banks is clearly in violation of the industry wide settlement and hence the management of these banks is liable to be prosecuted under section 29 of the Industrial Disputes Act, 1947. But the Government of India and Reserve Bank of India are clearly behind these banks for their blatant violation of the industry level bipartite settlements. Rather they encourage and guide them to indulge in more such violations. RBI guidelines in January 2006 with regard to engaging business facilitators or business correspondents for doing key functions of the banking industry like opening of accounts, deposit mobilization, disbursement of small credits, issuance of credit and debit cards, recovery of loans in the name of financial inclusion are clearly aimed at rendering thousands and thousands of permanent jobs in the industry surplus and exploitation of cheap labour available in the market. Besides that, the customers’ money is also not safe. That is why UFBU resolutely opposed such move and conducted various agitations including four days’ industry wide strike against the same during the past two years.

But the managements of several banks have decided to follow the RBI guidelines blindly despite stiff resistance and started appointing business correspondents in large numbers. State Bank of India, as usual, is in the lead. This bank plans to recruit one lakh business facilitators in one year period and has already appointed more than 5000 such persons for a paltry sum of fixed amount and commission amount based on performance. The retired officers are appointed to supervise them. When interviews were conducted for recruitment of retired officers by the State Bank Management in Trivandrum, Coimbatore and Chennai BEFI and DYFI (Democratic Youth Federation of India) cadres conducted massive demonstrations and DYFI cadres staged dharna inside the premises forcing the management to call off the interviews.

But the danger continues. The honourable Finance Minister in his budget speech on 29^th Feb 2008 has made the following observations “to allow individuals such as retired bank officers, ex-servicemen etc to be appointed as business facilitator or business correspondent or credit counselor”. Thus the Government at the Centre is determined to resort to outsourcing of the core functions of the public and private banks. Therefore there is an uphill task before the bank employees to fight out the menace of outsourcing fully supported by the Government of India.

The strike actions of 25^th and 26^th Feb 2008 were withdrawn and the minutes that followed assured of discussion on outsourcing. The minutes between the IBA and the UFBU on this subject read as given below: “On Outsourcing, it has been agreed between IBA and UFBU that discussions will be held on 18.03.2008, and the discussions should be completed within the next 6 weeks.”

During the discussions between UFBU and IBA on 18.03.08, the UFBU has taken up the following stand:

*No outsourcing of jobs beyond what has been agreed in the 8^th bipartite settlement

*No employment of the bank staff on contractual basis

*All the bank jobs of regular, permanent and perennial nature must be entrusted to the permanent employees and officers and not outsourced or given on contract

*The outsourced jobs should be in sourced immediately

*All the existing contract and outsourced employees should be regularized and absorbed as permanent staff of the bank

The earlier such assurance in March 2007 was observed in breach by the IBA. Now it has to be seen whether any seriousness has dawned on the IBA due to the successful observance of one day strike in Jan 2008 and the serious preparations for the two days’ strike in Feb.2008.

In essence outsourcing is a serious threat not only to the job security of the existing bank employees but also to the lakhs of the educated unemployed youth waiting for a decent job. The surveys conducted in several countries reveal that crime rate is directly proportionate to the magnitude of the unemployment in that country. Every adult is entitled for a decent job and income. When that is denied the society faces a lot of problems which could be avoided by employing them gainfully. The very fact that 2.11 crore households from 200 districts demanded minimum wages (Rs.80/- per day for 100 days in a year) under the NRGEA (National Rural Guarantee Employment Act) in 2006-07 is indicative of the extent of joblessness and distress prevailing in the rural areas. The rate of unemployment has increased from 6.1% in 1993-94 to 8.3% in 2004-05. These figures clearly establish the magnitude of the unemployment in our country both in rural areas as well as urban areas.

Systematic reduction of manpower, introduction high technology and outsourcing has already reduced the wage bill of the banks. Similar is the case of the several organized sectors. According to the Eleventh Plan Document, wage share in the organized industrial sector has halved after 1980s and is now among the lowest in the world.

Thus outsourcing poses a serious challenge before the working class in general and the bank employees in particular. Stiff resistance has to be developed and sustained movement including struggles has to be built along with the youth of the country and with the support of the public at large to check the menace of outsourcing.