The Indian government’s think tank NITI Aayog has suggested that employees of nationalised banks put up for privatisation be given job protection for one year, two people familiar with the matter told BloombergQuint on condition of anonymity.
The proposal has gone as part of a wider set of suggestions made by NITI Aayog on bank privatisation and a final decision on the matter will only be taken by the Ministry of Finance.
Finance Minister Nirmala Sitharaman in her Union Budget speech for 2021-22 said the government will privatise two state-run banks. The government has already privatised IDBI Bank Ltd. by selling its majority stake to Life Insurance Corp. of India in 2019. It has also merged 14 state-run banks in the last four years.
BloombergQuint couldn’t confirm the names of the banks recommended for privatisation.
The whole purpose of privatisation is streamlining bank operations, said the first of the two people cited earlier. The unions want guaranteed employment, but the government wants efficiencies in the economy, this person said.
Niti Aayog has suggested a temporary employment guarantee of around one year, this person said.
In offering a one-year guarantee, the government is drawing on the experience of the Air India privatisation process. There, when the government initially gave a three-year job guarantee, few investors were interested. A shorter guarantee of one year was preferable to investors. The template for bank privatisation will be on similar lines, the person said.
The NITI Aayog has submitted its recommendations but the government is very tentative on this, said a second person familiar with the matter. A decision has not been taken by the Department of Investment and Public Asset Management at all, the second person said.
The think-tank has submitted its recommendations to the Committee of Secretaries. After deliberations, DIPAM will take it to the Cabinet Committee on Economic Affairs and then CCEA will take the final call, the first person cited earlier said.
Emails sent to the Ministry of Finance and the office of the NITI Aayog vice chairman on Monday went unanswered.
According to data available as of March 2020, state-run banks employ 7.9 lakh employees. Of these, 3.96 lakh are officers, 2.8 lakh are employed as clerks and another 1.1 lakh are working as “sub-staff”.
Bank privatisation has always been opposed by employee unions. In March several bank unions belonging to state-owned banks went on a two-day nationwide strike to oppose the government’s privatisation move.
All India Bank Officers’ Confederation spokesperson Ravinder Gupta said such short-term job protection will face opposition.
“If true, this will be fatal for those working in the organisations and should not be implemented because there will be huge opposition for this single reason,” he said. “People should continue to get the same benefits and protection.”
VG Kannan, former chief executive officer of the Indian Banks’ Association, on the other hand, termed the idea of a one-year employment guarantee as to reasonable.