IDBI Bank claims strike failed, unions say near success

IDBI Bank claims strike failed, unions say near success

Even as unions of state-run IDBI Bank on Monday claimed a successful one-day strike, the management said the bank “functioned normally”.

The strike, which was called by the United Platform of IDBI Bank Unions (UPIBU), which constitutes officers from the All India IDBI Officers’ Association (AIIDBIOA) and IDBI Employees’ Association (IDBIEA), is one of the many hurdles to the government’s privatization drive and attempts to consolidate other public sector bank (PSBs).

The bank claimed that none of its services were disrupted following the nation-wide strike, except in Karnataka, where the high court has asked the unions not to go on strike.

“All banking services like front-office services, back-office operations including cheque clearing, remittances, RTGS/NEFT, transaction banking services, treasury operations have been functioning normally,” IDBI Bank said in a statement.

But the unions gave a different picture. “The strike was a grand success. All the offices and branches of the bank remained closed today,” UFIOE, which called for a one-day strike, said in a statement.

Employees and officers affiliated to UPIBU have called for a four-day strike. “Today, almost 85% of the officers and 100% of employees were on strike. Our strike will continue for three more days,” a member of UPIBU said.

“Our agitation programme, which includes the four-day strike, is against the contemplated move of the government to reduce its stake in IDBI Bank below 50%,” said UPIBU in a statement, demanding that suspension orders issued against certain officers regarding their agitation last week be revoked.

The protest follows two failed reconciliatory meetings with the labour commissioner on 18 March and 21 March between IDBI Bank employees and the management.

Separately, the All India Bank Officers’ Association (AIBOA) had also issued a one-day strike call on Monday to lend support to IDBI Bank union.

Finance minister Arun Jaitley, in his budget speech last month, said that the government will consider ceding control of IDBI Bank, slashing its stake to less than 50% from 80.2% now.

The privatization drive is part of the larger plan to infuse Rs.19,000-20,000 crore of equity into the bank before 31 March 2019 under the Basel-III norms.

Other options include sale of non-core assets and raising fresh money through a private placement to institutional placement which IDBI Bank announced in December 2015.

On 21 March, Mint reported that the International Finance Corp., a private investment arm of the World Bank, was one of the investors interested in buying a stake in IDBI Bank and had finished inspection of the bank’s balance sheet and other financial information.

The UK’s CDC Group Plc. and US private equity firm TPG Capital were also in talks with the government to buy a stake, said the report. Both IFC and CDC Group officials were in Mumbai two weeks ago to meet top IDBI Bank executives.

Names of other interested parties such as the Government of Singapore Investment Corp. (GIC), a sovereign wealth fund, and private equity firm Temasek Holdings Pvt. Ltd have also emerged.

On 1 March, the bank announced a three-year turnaround plan in which the lender aims to double its total business to over Rs.10 trillion by March 2019 from the current level of about Rs.5 trillion.

The government’s proposal to trim its stake in IDBI Bank to under 50% will be a test case for whether the government can pursue the politically difficult plan to privatize state-run lenders. According to a Moody’s report, Indian banks will need an estimated Rs.1.45 trillion of equity fund infusion by March 2019 to recapitalize weak banks.

At 9:20am, IDBI Bank shares were quoting at Rs.70.50 apiece on the BSE. The stock was down 0.42% from Wednesday’s close. Indian markets were closed on Thursday and Friday on public holidays.

At current rates, the value of the government’s stake is Rs.10,737 crore. The stock has touched a high of Rs.95.70 and a low of Rs.47.40 in the past 52 weeks.

The government infusion into state-owned banks is part of the Basel-III norms to improve the banking sector’s ability to deal with financial and economic stress. The norms require banks to maintain a minimum capital adequacy of 9% and a Tier-I capital ratio of 7%. Indian banks need an estimated Rs.3.7 trillion by the year ended 31 March 2019 to meet the requirements.

Source:BankingUpdates