For the two Calcutta banks Uco and UBI, the Verma committee report on weak bank holds the key to the future
Saddled with huge non performing assets coping with a spiralling wage bill, the biggest problem facing the banking sectors today is not perhaps the recession in the economy, which will determine the credit offtake and
hence higher advances and interest earnings.
The toughest decisions to be taken by the banks concern the future of the vast human resources emoloyed in this sector. The public sector banks have about 1.3 million employees.
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In a highly competitive scenario, shedding flab, especially by the public sector banks, will finally determine their Survival, feel experts in the sector.
The two 'weak' public sector banks in West Bengal, which will have to embark on such hard decisions, sooner or later are Uco Bank and United Bank of India (UBI).
The government has initiated the second stage, of banking sector reforms by forming the M S Verma committee for recommending financial and operational re-engineering for weak banks through a range of options.
These options will include restructuring, mergers and amalgamations.
Uco, UBI and Indian Bank are now waiting for the recommendations, following which these banks will plan their revival strategy.
In 1998-99, Uco posted a net loss of Rs 67 crore against Rs 96 crore in the previous year, while UBI is yet to declare its results for 1998-99.
In 1997-98, UBI earned a net profit of Rs 9 crore as against a net loss of Rs 113 crore in 1996-97.
While UBI's percentage Of NPAs,to net advances was 14 per cent in 1997-98, that of Uco stands at 10.83 percent in 1998-99.
But the highly unionised banking sector will find it extremely difficult to adopt these stern mea sures, say senior bank officials.
Says Tarakeswar Chakraborti, general secretary of the United Forum of Bank Unions, "There are many areas in the country - urban and rural where bank branches can be opened up and employees suitably redeployed".
Fresh young blood with skills in technology is needed in the banks and existing employees mostly young and highly educated-can be given training in technology.
"As a result young blood with- out experience nad a little old blood with a lot of experiencewill give new demension to the banks' customer service" Chakraborti emphasises.
The general view of the bank unions is that voluntary retirement schemes are not feasible since their costs are high.
The alternative of the infusion of funds by the gover