SBI merger: Hyderabad HC stays absorption of associate banks' officers

The scheme for absorption of 30,000 officers of five associate banks initiated by State Bank of India (SBI) hit a speed bump on Thursday, with the high court here issuing an interim order, directing the country’s biggest lender to not act on the options given by these staffers till June 15.

The court has been petitioned by State Bank of Hyderabad and Associate Banks Association. It has  challenged the scheme by which options have been sought from the officers to be absorbed. They contend there is lack of clarity on conditions such as seniority after the merger and on alleged disparities in superannuation benefits for SBI officers and those of the associate banks in a merged entity.

The HC has directed SBI to file a reply before a further hearing. This came on the day of expiry of the deadline for submission of options for officers of the associates being merged — State Bank of Hyderabad, State Bank of Bikaner & Jaipur, State Bank of Mysore, State Bank of Patiala and State Bank of Travancore, besides Bharatiya Mahila Bank.

“We have brought our concerns to the notice of the Union finance minister, Reserve Bank of India and the SBI chairman in the past year but did not receive any positive response. That is why we had to pursue legal means to seek justice,” said Harshavardhan Madabhushi, secretary general of the petitioner association.

As the SBI management maintains the absorption of staff was just a continuation of their service, there was no rationale in offering Provident Fund benefits (associate bank staff do not have a PF provision) only from April 1, 2017, or tweaking the terminal benefits compared to those for SBI officers, the petitioners argue.  They also express apprehension over SBI not spelling out the parameters on their seniority in the merged entity. Officers of the associate banks enjoy slightly better pension and gratuity provisions compared to counterparts in SBI but the petitioners argue such benefits were cut whereever there was a possibility of an associate bank officer getting more than a SBI counterpart in the new scheme.

With the court stay, the petitioners believes the Voluntary Retirement Scheme (VRS) announced by SBI will also have to undergo changes, depending on the final judgement. So far, 4,000 of the associate banks’ staff, mostly officers, hace opted for the VRS. “Those who have opted for it have done so as they did not find merit in the service conditions offered by the management,” said Madabhushi. On August 16 last year, all the boards of directors of the associate banks had approved the acquisition scheme mooted by SBI. At the time, the officers and other staff of these banks had said the scheme was silent on aspects important to them, concerning pay and allowances, except for stating that “pay and allowances offered to the employees and officers shall not be less favourable, overall, as compared to what they would have drawn in the associate bank”.

In a letter to Union Finance Minister Arun Jaitley in 2016, the petitioner body had said its concern and nervousness on these aspects was more so because of what they'd observed on the earlier acquisitions of State Bank of Saurashtra and State Bank of Indore.

It said SBI had reduced the seniority, depriving officers of equitable promotional opportunities after the acquisition. It was alleged that certain allowances being paid to similarly placed officers in SBI were denied to State Bank of Saurashtra and State Bank of Indore officers after the merger