The government has declared the banking industry as a public utility service for six months till October 21 under the provisions of the Industrial Disputes Act. The order to make banking an essential service was issued by the Department of Financial Services in a circular dated April 20. The order said the labour and employment ministry through a notification has declared "banking industry as a public utility service" for six months with effect from April 21.
The notification was issued by the labour ministry on April 17 against the backdrop of the coronavirus pandemic which has significantly impacted economic activities. The Department of Financial Services' circular has been addressed to the RBI Governor, SBI Chairman, Managing Directors and CEOs of nationalised banks, and the CEO of Indian Banks' Association (IBA).
Banking declared essential services: What it means
Bringing banking services under the provisions of this Industrial Disputes Act.t means that the banking sector would not see any strikes by employees or officers during the operation of the law starting from April 21.
There are over a dozen employees and officers unions in the banking sector. These unions enjoy a considerable say in wage negotiations, which the IBA deals with every three years.
All public sector banks, old generation private sector banks like HDFC Bank, ICICI Bank, Axis Bank and Federal Bank are members of the IBA. Some of the oldest foreign banks -- HSBC, StanChart and Citibank -- are also part of it. All of them come under wage settlements and other employee issues that are taken up by IBA.
New generation private sector lenders like Kotak Bank, IndusInd Bank and Yes Bank are outside the purview of IBA norms.