In a hard hitting statement, All India Bank Officers' Confederation (AIBOC), the largest officers' organization with a membership of around 3.50 lakh officers has questioned the Reserve Bank of India’s (RBI) decision to restrict Dena Bank from fresh credit exposure and staff recruitment under the Prompt Corrective Action (PCA) programme. The statement points out that half the public sector banks (PSBs) are under PCA (they include Bank of India, United Bank of India, and Corporation Bank)
It is understandable that the primary reason behind putting a ban on Dena Bank’s fresh exposure is the high non-performing assets, says, the statement. However, “the basic function of any bank is to accept deposits for the purpose of lending. Now, in the name of PCA, the regulator is bringing in restriction on their basic function.” The Union calls it ironical, that on the one hand, government is insisting on a turnaround of the PSBs, while on the other, it is restricting them from performing their core function.
Reserve Bank’s order that there will be no new recruitment would burden existing staff with the vacuum created by the continuous large-scale retirements in these banks, which will lead to a manpower crisis, says the union.
AIBOC points out that most loans that have turned non-performing assets (NPAs) are sanctioned at board level of the Banks, which include RBI and government representatives. Bank officers have no role to play, moreover, the posts of Officers' and Workmen's Director on most bank boards are lying vacant for three years and the government “seems to be in no mood” to make appointments. But when NPAs rise, the burden is shifted to bank and bank staff, says AIBOC.
AIBOC says that these “vexatious” steps of putting more and more PSBs under prompt corrective action, is in preparation to “handover the public sector banks to the private players”. The union has urged the government and the RBI not to “proceed further with the imposition of PCA norms or else we will also be forced to move ahead with our organizational action”.
AIBOC has demanded prompt implementation of the recommendations of the Parliamentary Standing Committee on NPAs of financial institutions. It says, this move will automatically reduce NPAs. It has also said that PCA has not helped a single bank and wants a review of this action. AIBOC has demanded a white paper on what happened to the ‘Turn Around Plan’ for each bank that was submitted by AIBOC. It has also called for a review of the Insolvency and Bankruptcy Code and the proceedings under the NCLT, which it alleges, “are only helping defaulters and Corporates through hair cuts” and not the Banks. AIBOC has also called for a review of the asset classification norms failing which it plans an agitation in the bank.
Meanwhile, Piyush Goyal, who is holding charge of the Finance Ministry, made some extremely conciliatory noises. After a meeting with heads of 11 PSBs, Mr Goyal claimed that the bank chiefs had spoken about issues with their banks and solutions and that they were to meet his officials in a day long meeting to hammer out solutions for a turnaround. This is the first time in many months that the government has shown any serious responsibility for PSBs and their fate and indicated a determination to turn them around.