22 March 2005, witnessed a virtual standstill in transactions in banks across the country when the officers and employees went on a day’s strike against the union governments proposal to merge public sector banks and to allow higher foreign direct investment in private banks.

Participating in the strike, over 10 lakh officers and employees of public, private sector, cooperative and rural banks abstained from their work. To make the 24-hour strike a success, the operation at ATMs were stopped.  All the ATMs adjacent to the banks were closed along with most of the stand-alone kiosks within the city. Workers rallied in major centres around the country.  In New Delhi, State Bank of India’s Parliamentary Street Branch was picketed by several hundreds under the surveillance of armed police deployed to the area. Chanting slogans against the ‘anti-worker’ move of the government, thousand of workers marched in Mumbai to the business district. Prior to this one-day token strike, on 11 March 2005 bank employees had staged a sit-down protest in front of Parliament.

The strike call given by the United Forum of Bank Unions (UFBU), a conglomerate of four officers’ unions and five workers’ organisations, claimed the strike was a “grand success”. The unions had organised protest marches in various cities all over the country.

The UFBU leaders said the government’s notion of making banks stronger through mega mergers was “illogical” as size does not necessarily mean strength. According to them, the core issue is non-performing assets (NPAs), which are growing year after year, for which adequate efforts to recover dues are not made. According to unions, the total NPAs in the banking sector were well over Rs 100,000 crore and even if 10 per cent of it is recovered, it would strengthen the banking sector better than mergers.

The UFBU has also recommended nationalisation of private banks. Since at present the private sector banks are mainly focusing on corporate loans, the unions say they will be forced to lend money for sectors like agriculture after nationalisation.

The same day, in Lok Sabha during the zero hour, Amitava Nandy of the CPI(M) along with the support of other left members, raised the issue stating that this one-day protest strike could later turn to be a prolonged agitation. The members also pointed out that handing over of the private banks to foreign operators would affect economic development since the priority lending as well as the credit deposit ratio were bound to be affected.

The estimates of Reserve Bank of India, as of March 2004, states the country’s banks have about 50,000 branches and 19.75 trillion rupees (451 billion dollars) in assets. The government has moved to radically reduce state-ownership of banks. The state-owned Punjab National Bank, India’s third largest lender, has offered to sell 80 million shares where as Allahabad Bank, India’s oldest public sector bank, will be announcing very soon its plans to offload the shares.