Is bank closure on alternate Saturdays fair to us?

After protracted negotiations, the Bank Unions and the Indian Banks’ Association (IBA) have signed the 10th bipartite settlement on the 25 May 2015 paving the way for revision in wages and perks to nearly a million employees of the banking industry. This is, no doubt, beneficial to bank employees but is a great relief to bank customers as well, because, this agreement was preceded by series of bank strikes, causing considerable inconvenience to bank customers, who were only silent spectators to this saga of industrial disputes recurring every five years.

The agreement increases bank employees’ salaries by about 15% coupled with improvements in various perquisites and medical insurance scheme for the families of employees. For the first time, there is the benefit of ‘paternity leave’ granted to male employees of banks from June 2015. Every male employee with less than two surviving children shall be eligible for 15 days of paternity leave during his wife’s confinement. This is certainly a family welfare measure and is a welcome change in the employer-employee relations.

Another important improvement in employee welfare is the decision to declare holidays on every second and fourth Saturday of the month. This is a great achievement for bank unions, who have been asking for five-day week on the lines of the Central Government offices. The IBA finally conceded and agreed to treat second and fourth Saturdays of the month as holidays and other Saturdays, as full working days. This change will be effective after approval by the Reserve Bank of India (RBI) and notification of the change is issued by the union government.

The demand of bank employees’ is reasonable as their counterparts in most state government offices too enjoy similar facility. But does this serve the needs of bank customers? Is it beneficial for banks to keep their branches closed on alternate Saturdays as agreed to with employee unions?

Looking from the angle of banks as well as their customers, this proposition is not in the interest of banks and their customers for the following reasons:

1. In the good old days, banks used to function in two shifts in residential areas keeping their doors open till late in the evening for customers’ convenience. But this system of working in two shifts has been quietly given a go by and today almost all the banks function continuously from 10am to 5pm. This makes a large number of customers to visit their banks mostly on Saturdays. But if banks are closed on alternate Saturdays, such customers, who are unable to visit branches on week days, will be put to considerable inconvenience.

2. The biggest advantage of keeping banks open on Saturdays is for the small traders and shopkeepers, who invariably keep their shops, open all days during the week. They can reduce their risk of holding cash in their tills at least by a day by depositing such cash with the bank on Saturdays. This also helps them to bring down their interest costs by a day’s interest every week, if they have borrowing accounts with banks. But keeping the banks closed on two Saturdays will totally negate these benefits for the common people.

3. Our country has a large number of illiterate and semi-literate people, who require detailed guidance from the banks’ staff in banking systems and procedures, and this is possible mostly on Saturdays, as work pressure is much less on those days compared to week days. But this advantage to banks’ customers would be completely lost, if banks are kept closed on two Saturdays in a month.

4. The  Prime Minister’s Jan Dhan Yojana has brought in additional 14 crore people in to the banking fold and it is a onerous responsibility for the banks to service these large number of additional customers, who need to be handled with abundant patience to keep these accounts alive. Otherwise, they will remain inoperative and the entire efforts of the banks and the government will be totally lost to the detriment of banks’ interest. And it is here that working on Saturdays will come in handy for banks to take care of their requirements and keep those accounts alive.

5. Banks in India are already losing the trust and confidence of the public, which is evident from the fact that during 2014-2015, growth of deposits with banks has hit a 51 year low of 11.42% as per the report of RBI. The last time deposits grew at a pace below this was in 1962-63, when the increase was 6.5%. This is mainly because, banks have introduced restrictive practices like levying charges for depositing cash with banks and for withdrawing their own money through ATMs beyond certain limits, enhancing minimum balance required to be maintained in savings accounts and charging even for sending transaction alerts through SMSs to customers. Therefore, keeping bank branches closed on alternate Saturdays will only result in further alienation of loyal customers, who will divert their savings to other savings instruments, which are hassle free and more convenient to deal with.

6. Even from the angle of improving business, the proposal to keep banks closed on alternate Saturdays will have a negative impact, as it will only result in driving the white collared salaried class bank customers away from banks. For their home loans, vehicle loans and personal loans, these customers would go to non-banking finance companies (NBFCs) and housing finance companies (HFCs), who will welcome them with open arms on all six days of the week. As per the RBI report, the credit growth in banks last year hit a 20-year low of 9.75%, and it would only worsen, if banks shut off their branches on two Saturdays in a month.

7.  “The 15% wage revision would cost banks Rs4,725 crore as incremental salary and allowances in a year. If superannuation cost is included, then the total burden would be around Rs8,370 crore,” IBA Chairman TM Bhasin told reporters after signing the 10th Bipartite agreement. If this additional burden is to be recouped, banks should look at optimisation of their resources and infrastructure and try to increase their overall business, by improving service and quicker decision making at all levels. Keeping the banks closed even for two days in a month is not the answer.

8. Two of the large public sector banks have declared huge losses during the last quarter of last financial year, indicating stress and strain in their operations. Only time alone will tell whether they will turn around or go deep into red in the coming quarters, but the need to increase low cost deposits by banks to improve the profitability of banks is imperative. And this can be achieved only by keeping the banks open on all Saturdays to provide convenient banking to the public and attract more customers.

It is obvious; therefore, that the proposal of keeping banks closed on two Saturdays in a month is non-productive and does not help either the banks or its customers. This certainly does not mean that the bank employees do not deserve a day each off on two weekends in a month, which they have secured after hard bargaining and long struggle over the years. Bank employees have to be very diligent in their day to day work as they deal with public money and cannot afford to be lax even for a minute while at work.  Banking jobs are much more risky than similar jobs in other offices, and therefore, bank employees certainly need to relax more than others in the interest of maintaining their health during their working life.

So what is the alternative? The best alternative under the circumstances is to keep the banks open for full six days in a week, but give a day off on any alternate day for those employees who are required to work on Saturdays in rotation, so that the employees get an extra day off once in 15 days as per the commitment already given by the IBA to bank unions. This is akin to how institutions like hospitals, public transport and other essential services work by providing alternate holiday to those who work during the week ends. This will be a win-win situation to all stake holders and more importantly, banks will be able to attract support of those customers who are unable to visit the bank during working days.

If the RBI has the interest of banks and its customers at heart, this is an opportunity for the central bank to radically change working hours of banks. RBI can ask banks to keep their branches open for full six days in a week leaving them to manage their employees by giving alternate holidays to honour commitment made by IBA to bank unions.

In the ultimate analysis, if customers are satisfied they will patronise the banks which will in turn prosper, and if banks prosper, they will pamper their employees who will also prosper, and if banks and employees prosper, the whole economy will prosper.

The key to prosperity, therefore, is customer satisfaction in any business, more so in a service industry like banking. Let us, therefore, unlock the banking system of our country through this single key for the prosperity of all.

[“source-moneylife.in”]