The Impact of PSU Bank Merger and Consolidation on Employees: Fear, Power Shifts, and Reality

Indian bank employees have been grappling with the resistance and fears associated with the merger of Public Sector (PSU) banks, a decision announced by Finance Minister (FM) Nirmala Sitharaman. This move, similar to past mergers, has sparked concerns among employees, specifically around job security, career progression, and union power dynamics. This article explores the multifaceted issues surrounding PSU bank mergers and consolidations and the differing perspectives of employees and union leaders.

Fear and Uncertainty Among Employees

The announcement of mergers and consolidations has evoked a sense of fear and uncertainty among many bank employees. The primary concerns are job security, potential displacement, and reduced opportunities for career advancement. The FM's statement that branches will not be closed aims to alleviate these fears, but it comes with caveats. Future realignments may still lead to branch relocations and employee displacement.

Employee Perspectives on Merger

Lower-level employees generally view the merger positively, recognizing the benefits of increased staffing and improved organizational efficiency. With the merger, 20 banks will have around 5-6 employees per branch, while 10 banks will have 11-12 employees per branch. This consolidation is projected to enhance productivity and efficiency. Additionally, it will aid in the cleanup of the balance sheets, addressing longstanding issues related to non-performing assets.

However, the top 10 banks and the bank unions are apprehensive about the erosion of their powers. Many unions are communist-oriented and their primary agenda is to oppose government decisions. These unions, composed mainly of leaders who have long since left the banking industry, are now powerless in influencing future policies.

Concerns Over Transfers and Unions

Any merger brings with it the threat of transfers, which can be particularly unsettling for employees who prefer to stay in their hometowns or states. The circular laws in most PSU banks typically ensure that South Indians are posted in the south and North Indians in the north. However, during a merger, the merged entity may decide to fill vacuums with massive transfers, potentially reassigning employees to different regions and locations.

The loss of union power is another significant concern. Unions that dominate in one entity may become weaker after a merger, as their influence wanes. For instance, the unions of SBT and SBM were once significant but now are virtually non-existent due to the supremacy of the SBI union. This shift in power dynamics can lead to a more hierarchical and less democratic work environment.

Post-Merger Realities: Step-Motherly Treatment and No Shared Role

Post-merger, there is often a perception of step-motherly treatment among the merged and mergee bank employees. Promotions, assignments, and transfers can seem biased, with one group of employees benefiting more than the other. SBI took significant measures to avoid this, offering attractive postings and VRS (Voluntary Retirement Scheme) packages. In contrast, the merger between Bank of Baroda, Vijaya Bank, and Dena Bank has resulted in a less favorable treatment for employees, with no VRS options provided.

Bank unions argue that many of the bad loans causing the NPA (Non-Performing Asset) crisis were made by the top management. Lower-level employees had no role in these decisions, yet they are bearing the brunt of the consequences. This is akin to the World War I argument where young Britishers protested that because they could not vote for war, they should not have to fight it. Unions advocate for a more democratic process, where loan decisions should be made by asset committees rather than high-ranking officials.

Is Merger Beneficial?

Despite the government's claims of synergy and job security, any merger inevitably leads to workforce trimming. The consolidation serves the broader purpose of reducing the number of employees. While the government claims that no one will leave, the reality is that staff reductions will occur, with employees leaving on "dissociation" terms. This is especially true for newly merged banks where there is no existing organizational structure.

Union leaders also argue that the so-called advantages of these mergers are merely theoretical. The government's intention is to reduce the PSU bank workforce over a 10-year period through these supposed mergers, rather than conducting outright layoffs. Meanwhile, PSU banks continue to hold 1-2 day strikes, which serve mostly to frustrate the public rather than achieving any tangible goals.

Conclusion

While the consolidation of Indian PSU banks is aimed at streamlining operations and enhancing efficiency, it comes with significant challenges and fears for the employees. The power dynamics, transfer issues, and job security concerns are pivotal factors that contribute to ongoing opposition. As these mergers continue, it will be crucial to address these concerns and find a balance that benefits both employees and the banking sector as a whole.