Bank unions call for strike on Wednesday

Employees’ and officers’ unions from all banks, except SBI, will be on a day-long strike on Wednesday to protest against the consolidation and privatisation of State-run banks

Around 26 State-run or public sector banks (PSBs)—excluding State Bank of India (SBI)—and some private and foreign banks, are set to observe a nationwide strike on 16th December, to protest against consolidation and privatisation of State-run lenders.

The all-India strike, called by the All India Bank Employees Association (AIBEA) and All India Bank Officers Association (AIBOA), will see the participation of about 6 lakh employees from 26 PSBs, 18 private sector and 10 foreign banks, said Vishwas Utagi, secretary, AIBEA.

The strike is likely to affect banking services like cheque clearing operations, foreign currency transactions as well as money market operations.

Their call to arms is against banking sector reforms such as privatisation of State-run banks, consolidation of State-run banks and amendment of the Banking Regulations Act to allow full voting rights to foreign investors in the banking sector.

State-run banks taking lead in this strike include Allahabad Bank, Andhra Bank, Bank of Baroda, Bank of India, Bank of Maharashtra, Canara Bank, Central Bank of India, Corporation Bank, Dena Bank, Indian Bank, Indian Overseas Bank, Oriental Bank of Commerce, Punjab & Sind Bank, Punjab National Bank, Syndicate Bank, UCO Bank, Union Bank of India, United Bank of India and Vijaya Bank. Although SBI, the country’s largest lender, is not participating in the strike, its associate banks are set to take part.

Private banks in the fray include Bank of Rajasthan, Bharat Overseas Bank, Dhanalakshmi Bank, Federal Bank, Jammu & Kashmir Bank, Karnataka Bank, Karur Vysya Bank, Lakshmi Vilas Bank, Lord Krishna Bank, Nainital Bank, Ratnakar Bank, Sangli Bank, South Indian Bank and ING Vysya Bank.

Foreign banks participating include ABN AMRO Bank, American Express Bank, Bank of America NA, BNP Paribas, Citibank NA, HSBC, Sonali Bank and Standard Chartered Bank.
The unions are of the opinion that privatisation will enable corporate houses to capture the hard-earned savings of the people and use them for self-serving purposes. They are against the dilution of government capital in PSBs to less than 51%. The unions are also protesting against the $2-billion loan taken by the government from the World Bank to shore up the capital base of some PSBs, pointing to adverse stipulations likely to be imposed by the World Bank.

Further, the unions have taken exception to the merger of State-run banks and closure of associate banks. They have raised concerns that this would turn such banks into big monopoly institutions threatening employees’ job security. Both unions are against the proposed move to close down State Bank of Indore and merge it with SBI. Essentially, the unions are opposed to further consolidation in the banking sector.

Another issue they have raised is the amendment to Section 12(2) of the Banking Regulations Act, which would provide full voting rights to foreign investors, removing the current ceiling. The unions say this would leave Indian banks vulnerable to takeovers by foreign investors and endanger people’s savings in such banks.

The list of demands include strengthening and expansion of public sector banks, instead of consolidation, bringing private banks under public sector control and introducing stringent norms for recovering bad loans.

The unions have taken a firm stand on these issues and may intensify agitations if the government fails to take note of their grievances. However, it is most unlikely that the government will take a U-turn on its plans for introducing reforms in the banking sector.

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Fitch cuts Bajaj Eco-Tech’s NLR to ‘BB’ from ‘BBB-’; outlook negative

The downgrade reflects the significant deterioration in BEPL's credit profile on the back of delays in the stabilisation of its particle board and medium-density fibreboard manufacturing facility, which has resulted in cash losses and has had a severe impact on FY09 liquidity

Fitch Ratings has said that it has cut Bajaj Eco-Tech Products Ltd’s (BEPL) national long term (NLR) rating to ‘BB' from 'BBB-', due to deterioration in the company’s credit profile following delays at BEPL’s manufacturing facilities.
The ratings agency also revised BEPL’s outlook to ‘negative’ from ‘stable’ on Fitch's expectations that the company's credit profile and liquidity would remain under pressure in the short- to-medium-term, due to lower revenue and profitability.

Fitch said that the downgrade reflects the significant deterioration in BEPL's credit profile on the back of delays in the stabilisation of its particle board and medium-density fibreboard manufacturing facility which resulted in cash losses and had a severe impact on FY09 liquidity.

While liquidity continues to remain stretched, Fitch said that the company has shown some improvement in its profitability over the past six months, with liquidity being aided by continuous equity infusion from BEPL’s parent, Bajaj Hindusthan Ltd, and the downgraded ratings continue to factor in parental support.

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