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India bank strike hits markets, customers suffer
Publication Date : 23-08-2012
Responding to the two-day strike call by the United Forum of Bank Unions, more than a million bank employees and officers yesterday struck work bringing the entire banking sector in India to a grinding halt.
In Mumbai, inter-bank and corporate cheque transactions running into thousands of crore could not take place because the Inter-Bank Clearing House--where instruments drawn among financial institutions are settled--was shut down for want of staff.
Stock trading on Dalal Street and money markets too suffered on account of the strike. Customers fear that when the banks will reopen on Friday, there will be a huge rush as banks close early on Saturday and Sunday is a holiday.
Union leaders claimed that the first day of the strike was a complete success. Early in the morning, the country's top lender State Bank of India suspended operations in onshore interbank foreign exchange spot market, citing absence of backroom settlement staff. No forward deals could take place as the SBI management thought it prudent to abandon them for the day. The bank may review the situation today.
Several foreign banks and ATMs were working as usual. Stock trading on Dalal Street was subdued as players were handicapped by the shortage of ready back-up funds from their banks. This was reflected in Wednesday's trading.
On the Bombay Stock Exchange, just 86 lakh shares were traded during the day (1 lakh = 100,000). The 30-share Sensitive Index was range-bound and closed 38.40 points or 0.21 per cent down at 17,846.86 points with 12 shares moving up and 17 down. One remained unchanged. The 50-stock Nifty of the National Stock Exchange closed 5412.85 points down 8.15 points or 0.15 per cent.
The markets are likely to stay dull today, say analysts. The Indian Banks Association, a representative body of all bank managements, said the two-day strike would save up to 400 crore rupees in wage payments (1 crore = 10 million). The only constructive demand put forth by the UFBU pertains to stringent laws to recover bad loans especially owed by big corporate houses and already moneyed clients.
Ironically, both the government and the Reserve Bank of India are unresponsive to this demand.Of the 10 lakh bank employees and officers, more than 70 per cent represent state-run public sector banks. The strike paralysed the entire banking sector as 27 PSU banks, 12 private and six foreign banks joined the strike. The unions are opposing foreign ownership in public sector undertaking banks capped at 20 per cent.
Many MNC financial institutions are looking to increase their stakes in India's vast banking industry, the state-run banks in particular.
The public sector undertaking banks operated 87,000 branches across the country supplemented by 63,000 ATM booths. “The strike is on since this morning. Nearly 10 lakh employees are participating in it. This includes 24 public-sector banks, 12 private banks and six foreign banks,” All India Bank Employees Association general-secretary CH Venkatachalam said, according to agencies.
He also said that ATMs would work till they had cash and thereafter those services will also be impacted. The strike has been called against the government's policies of liberalisation, privatisation and globalisation. Bank unions are demanding stringent and effective measures to recover bad loans.
“The strike is on. All the nine unions are participating in it,” Rakesh Agarwal, general-secretary, State Bank of India Officers Association, said. Bank unions have been demanding pension revision, housing loan revision, five-day working week and resolution of human resource-related issues, Agarwal said.