One Grain Amongst the Storm

Communist ideology is the manna that fuels the trade unions’ fire. Notwithstanding the regional and politico-religious differences, it’s the hammer and the sickle motif that keeps the employee unions and associations going full steam. They get rattled at the faintest hint of reforms which they instinctively take for loss to their collective bargaining power, eroded socio-financial security, closure of industrial units and retrenchment of workers. Their nasty and prolonged opposition to computerisation is a classic case wherein they fought rabid wars with the “management” and the “government” for decades. Imagine where would have we been without the computerisation of the telecom, railways, banks, insurance and other such vital sectors.

Recent maelstroms and strikes in the banking industry may suggest that merger is a deeply resented measure by this species. Well, here comes the shocker! The trade union of a parallel industry happens to have a diametrically opposite view. We are, of course, talking of the GIEAIA (General Insurance Employees All India Association) whose 10th Biennial Conference recently concluded at Nagpur. This body of general insurance employees with strong Communist credentials has been clamouring for the merger of the four PSU arms of the General Insurance Corporation of India, i.e., National Insurance Company Limited, Oriental Insurance Company Limited, New India Assurance Company Limited and United India Insurance Company Limited, into one. They deeply believe that the amalgamation will result in enhanced financial stability, capacity to bear risk and prowess to combat competition which would translate to service to people of all walks of life including the poorest sections of the society. As a matter of fact, their press release emphatically used those very words. What is worth noting though, not even a single word was breathed about job redundancies or “branch closures” that such a merger may lead to.

Indeed, the contrast couldn’t have been starker if one were to turn to the Banking sector where a posse of employee unions and associations are fighting a pitched battle against the pro-merger manoeuvers of the “management”, with special focus to the State Bank Group which has finally started to restructure and synergize its business by merging its associates with self. With the recent approval of merger of State Bank of Indore with the SBI, the saber rattling has reached a crescendo. The entire lot is crying itself hoarse over the merger which they claim will lead to closure of large number of branches leading to huge job losses, greatly reduced competitiveness, curtailment of banking services to the masses, severance of socio-cultural ties of the customers and immense loss of business.

It is time to have a closer look at the antithetical views of the insurance and banking employee unions. In case of the general (non-life) insurance sector, the group happens to be the single dominant body across its four units and thus faces no threats on account of a merger. Their desire to merge emanates from their anxiety to beat the emerging private sector. On the other hand, the Banking industry has witnessed massive expansion in the aftermath of two rounds of nationalization resulting in matching proliferation of the trade union bodies. A merger may seriously tip the balance in favour of a rival faction. As is obvious, certain factions of the State Bank Group are shuddering at the thought of extreme marginalization, if not extinction on account of merger. Thus, its not difficult to see that the trade unions of both the sectors are merely fighting the battle of self perpetuation. While it is really difficult to assess whether the path chosen by the insurance sector unions is brilliant or accidental, that of the banking sector unions is utter disrespect to the wishes and welfare of its own participating members for sure.

With Dr Manmohan Singh at the helm for a consecutive term, a gearshift in reforms in the financial sector is the least the nation expects of him. However, barely few hours after the Minister of Finance exhorted the banking sector on the virtues of consolidation, the institutionalized junta started to pull every possible string to debunk the entire idea. Faceless ministry officials have started expressing concerns over the impending merger of the State Bank Group, which they feel will lead to “creation of a behemoth”. Quaint journalists and Ghost writers, hastily recalled from hibernation, are suddenly working overnight to propound philosophical views against merger. Dignitaries retired from the judiciary are expressing profound concern over the merger of Associate Banks and the resultant devastation of “cultural ties”. And to think that SBI doesn’t figure in the list of even top 10 Asian Banks, leave alone the world! And to think that Industrial and Commercial Bank of China is the size of a dozen SBI’s and more, and has probably deeper rooted cultural ties in China than the plethora of desi, regional, rural, cooperative and associate banks have within their respective areas, in our great multi-cultural nation.

If winds of change bring the fear of uncertainty with them, winds of change blowing intermittently for nearly half a century would but compound the fear of the unknown. Manifestation of this basic human emotion is getting louder and louder as the years pass by, gaining shape in acerbic reactions of various sections across the State Bank group, over the merger of the Associate banks with the SBI.

Transformed from the earlier State owned banks to subsidiaries of SBI, the associate banks had a quaint flag-off in the financial world in their new avatars. They were congenitally destined to remain fringe players as they were expected to remain firmly entrenched in the basins of their origin. For them, to think of other regions was grotesque. To think national was the job of the SBI. To think global was taboo. They were ideologically psyched into believing they were institutions whose uniqueness lied in being ‘regional’ banks. And while comparable banks from the same regions fanned out exponentially to become prominent national players having overseas presence, the associate banks remained content to flash the medallion of regionalism, forgetful of the prospects beyond in their imposed myopia.

The elaborately concocted potion of the State Bank Group, being brewed till date, epitomizes the half-hearted remedial measures that our political masters are apt to take, postponing mission critical acts to obscure future. Today, even though the associate banks are efficient and profitable units in themselves, and are even better than their principal in certain parameters, their future remains compromised by the false starts they had. Fifty odd years of existence in harness to the principal has further ensured an absence of dreams of growing or diversifying in significant ways. This is not surprising however, when one considers the original script of the play wherein these bodies were created to help SBI play the role of a potent national bank, and eventually to merge with it.

All along and as the associate banks enter the sixth decade of their existence, a dozen or so political regimes of all creeds and hues have beaten about the bush without any real will to reform the banking sector, leave alone resolving the dilemma of the associate banks. Although the question of merger has been invoked by the progressive elements every now and then, both affirmations and negations have quickly followed, not to mention the inevitable clamouring of the trade unions. And sure enough, the views emanating from different quarters have oscillated like the proverbial pendulum, except of course, those from the leftist bastion having controlling interests in many trade unions.

There is a less explored dimension to this rather overstretched saga of determined indecision that unfortunately remains ignored. Banks being a services industry, they are human resource intensive bodies. The perpetual supplementary status combined with a methodically controlled environment has done little good to the morale of the human capital of the associate banks. Worse still, the permanent uncertainty over the future has been a fertile tract for deep apprehensions among the rank and file. As a consequence, opportunists and organized pressure groups have taken advantage of the sustained confusion and have furthered their selfish cause to the detriment of the entire system.

Prodded by the approaching watershed of March 2009, as also the recent rise in the stature of ICICI Bank, SBI seems to have recalled the original plot of the play by approving the merger of State Bank of Saurashtra, one of its 7 associates, with it recently. But is the group anywhere near the climax? As expected, power clubs which have merrily thrived within the small shores of the associate banks have sprung to action, sensing imminent end. Divorce from SBI to form a separate entity together is being vociferously argued. All may not be quiet on the other front either. Faced with the imminent influx of thousands of employees, SBI appears to have its own share of rattled denizens. The fear of being overwhelmed by the deluge may goad many to adopt a defensive attitude against their peers in associate banks. Such a divide, fuelled by the never ending rigmarole, would indeed be unfortunate for an institution having global ambitions.