How to insulate the economy from bank strikes

S Muralidharan : FB :11 feb 2014

Bank employees going on strike is nothing new in India. The lament that inevitably follows such strike is how the economy has been brought to a screeching halt and how cheques and drafts deposited are piling up.

Public sector bank employees have had a grievance for long—the implementation of the sixth pay commission recommendations has had the galling effect of babus overtaking and upstaging them in the matter of pay. To be sure, there may be a compelling case for pay revision of the bank employees but the economy might not be held hostage whenever a strike is declared if only the routine bank services were not delivered by human beings but by technology and machines.

Those having ATM cards have taken the ongoing bank strike in their stride. The Reserve Bank of India, which is keen on ushering in a cheque-free economy, must first focus on ATMs though.

The cards have had the effect of freeing at least one banking function from the clutches of bumbling employees in a substantial measure. Enhance the safety and user friendly features like bio-metric identification by all means but never yield to the demand for user charges, a clamour made by many banks because the boot is on the other leg—judicious installation of ATMs can bring down the bank expenditure on cash disbursal substantially.

If ATMs have mushroomed unproductively, it is not the fault of the public or the RBI. As it is, it is a common sight to find five to six ATMs in a small shopping centre in major cities. ATMs must be separated from each other by a decent distance. After all, we do have a system of ATM share albeit with a rider—not more than Rs 10,000 can be withdrawn from an ATM not owned by the bank whose card is being used in such an ATM. There is no reason why banks cannot pool their resources to set up ATMs in a spirit of coopetition, taking a leaf from telecom companies who share towers.

That could perhaps be the precursor to merger of all the public sector banks for which there is a compelling case.

Of course, there are a few banks which have retained the task of replenishing the ATMs with themselves instead of outsourcing it to agencies. Such banks’ ATMs might well have run out of cash during the strike.

Let us now turn to non-cash transactions involving banks. Sweden is one country which has done away with cheques and drafts completely. Britain has also put the economy on notice—come 2015 there won’t be cheques and drafts.

The RBI too is itching to make the Indian banking operations paper-free but it seems it is putting the cart before the horse—we have large swathes of areas in the hinterlands untouched by the banking habit and therefore our focus must be on greater banking penetration before we think in terms of making banking paper-free.

Be that as it may. The RBI is right that as far as possible payments must be electronic be they salary to employees or suppliers or taxes to government. Online payments through cards and net banking need not be detained by striking employees.

The truth is many of the banking operations are amenable to mechanisation and digitalisation thereby making their customers truly independent of their employees.

Loans and lockers, of course, need the services of employees and willy-nilly would be affected by strikes. But then once the loan is sanctioned, the interaction of the borrower with the bank is at best once in a month.

Wilful defaulters, in fact, might be secretly happy with the strikes because it might be the catharsis they were looking for—momentary loosening of grips by the conscientious bank manager! As for users of bank lockers, it could hurt or benefit the users depending upon who they are. If they are the ones who have stashed away their ill-gotten paper wealth in the bank lockers, the strike may stop the sleuths in their tracks for the nonce.

But a female user especially might be terribly upset if the strike had prevented her from bejewelling herself for the marriage in the evening or for some other social engagement.

Another area is insurance under the bancassurance model. When bank employees double in as insurance peddlers, their strike is bound to affect the sale of insurance products as well besides upsetting lodgment and settlement of claims.

But locker, loan and insurance pale before the bread and butter functions of a bank—handling of cash and payments to third parties through use of banks’ cards and net-banking services.

Banking swaraj is there for the asking for customers who have overcome technology phobia and enthusiastically pay their bills from the comfort of their homes. Bank employees’ strikes need not strike them with trepidation.  Just as anonymity conferred by the net insulates people both from itchy palms and harassment of sundry government departments one perforce has to approach in the humdrum of his life, technology driven banking saves both time and money for its customers besides protecting them from their high-handedness and bumbling ways. In this sense, the digital world is the antidote to both corruption and wayward ways of employees of government departments and banks.