Labour Law Empirical Study:

Role of Trade Unions in Public Sector Banks

SUBMITTED TO,
Dr. Asha Verma
Assistant Professor of Law

SUBMITTED BY,
Akshat Kumar
4th year, 15A015
 ACKNOWLEDGEMENT

I am honored to present my empirical study on Role of Trade Unions in Public Sector Banks. I
wish to express my deepest gratitude to Dr. Asha Verma, our faculty for Labour Law, Gujarat
National Law University for their dedication and attending to the interests of the students as an
utmost priority. It has been a learning experience and privilege to study under their tutelage.
 INTRODUCTION

What is a trade Union?

A trade union, also commonly known as a labour union , is an organization of workers who
come together to achieve many common goals, such as protecting the integrity of its trade,
improving safety standards, and attaining better wages, benefits such as vacation, health care,
retirement and working conditions through the increased bargaining power wielded by the
creation of a monopoly of the workers. The trade union, through its leadership, bargains with the
employer on behalf of union members and negotiates labour contracts through collective
bargaining with employers. The most common purpose of these associations or unions is to
maintain or improve the conditions of their employment. This may include the negotiation
of wages, work rules, complaint procedures, rules governing hiring, firing and promotion of
workers, benefits, workplace safety and policies.

Karl Marx described trade unions thus: "The value of labour-power constitutes the conscious and
explicit foundation of the trade unions, whose importance for the working class can scarcely be
overestimated. The trade unions aim at nothing less than to prevent the reduction of wages below
the level that is traditionally maintained in the various branches of industry. That is to say, they
wish to prevent the price of labour-power from falling below its value"1

Unions may organize a particular section of skilled workers known as craft unionism, a cross-
section of workers from various trades known as general unionism, or attempt to organize all
workers within a particular industry called industrial unionism. The agreements negotiated by a
union are binding on the rank and file members and the employer and in some cases on other
non-member workers. Trade unions traditionally have a constitution which details the
governance of their bargaining unit and also have governance at various levels of government
depending on the industry that binds them legally to their negotiations and functioning.
Originating in Great Britain, trade unions became popular in many countries during the Industrial
Revolution. Trade unions were finally legalized for the first time in United Kingdom in 1872,
after a Royal Commission on Trade Unions in 1867 agreed that the establishment of the

1
Spartacus Educational, (Oct. 2, 2018, 2:07 PM), https://spartacus-educational.com/TUmarx.htm.
organizations was to the advantage of both employers and employees.2 Trade unions may be
composed of individual workers, professionals, students, apprentices or the unemployed.

Trade Unions in India

Trade Unions in India are registered and file annual returns under the Trade Union Act (1926).
Statistics on Trade Unions are collected annually by the Labour Bureau of the Ministry of Labour,
Government of India The Trade Union movement in India is largely divided along political lines
and follows a pre-Independence pattern of overlapping interactions between political parties and
unions.

Trade Union Section 2(h) of the Trade Unions Act, 1926 has defined a trade union as “Any
combination, whether temporary or permanent, formed primarily for the purpose of regulating the
relations between workmen and employers, or between workmen and workmen, or between
employers and employers, or for imposing restrictive conditions on the conduct of any trade or
business, and includes any federation of two or more trade unions.” Then this definition talks about
three relationships.3 They are relationship between the: Workmen and workmen Workmen and
employers; Employers and employers.

At the beginning of the last century, a few groups were formed amongst workers in India so as to
improve their bargaining power with respect to their service conditions and wages. These were
akin to trade unions of the present-day India. The earliest known of such unions were the
Printers’ Union formed in Calcutta in 1905 and the Bombay Postal Union formed in 1907. The
trade union movement in India began after the end of First World War due to the need for
coordination of activities of individual unions. The movement, over a period of time,
systematically spread to almost all industrial centers and became an integral part of the industrial
process in India. Various trade unions were formed during such period, such as the Madras
Labour Union in 1918, the All India Trade Union Congress (AITUC) in 1920, the Bengal Trade
Union Federation in 1922 and the All India Railway men’s Federation in 1922. Trade unions in

2
Report of the Royal Commission on Trade Unions and Employers Association (Donovan), (Oct. 2, 2018, 3:27 PM),
https://www.riir.ulaval.ca/sites/riir.ulaval.ca/files/1968_23-4_15.pdf.

3
The Trade Union Act, 1926, § 2(h), Act No. 16, Act of Parliament, 1926.
India have come a long way since the first organized trade union - the Madras Labour Union, one
of the earliest unions, was formed in 1918. India now has more than 84,642 registered (as well as
countless unregistered) trade unions 1 along with an unaccounted number of unregistered trade
unions scattered across a large spectrum of industries in India. The potential for growth in trade
union represented workers is huge given the fact that India is likely to have a working population
of more than 64% by the year 2021.4

There are twelve Central Trade Union Organizations (“CTUO”) recognized by the Ministry of
Labour. the Bharatiya Mazdoor Sangh (“BMS”), the Indian National Trade Union Congress
(“INTUC”) and the AITUC are considered to be the largest trade unions in India. Also, the
country’s manufacturing sector in particular, is heavily unionized.5

4
India: Trade Union and Collective Bargaining, (Oct. 2, 2018, 5:00 PM),
http://www.nishithdesai.com/fileadmin/user_upload/pdfs/Research%20Papers/India-Trade-Unions-and-
Collective-Bargaining.pdf.
5
Id.
 Role Of Trade Union in Public Sector Banks
Trade unionism in India is not confined to blue collar industrial workers alone, It has spread over
white collar salaried employees as well. White collar employees who were shy of trade unionism
in the beginning were unionized in a big way by the middle of the present century. White collar
employees, both in the Government Sector (Post and telegraph, Hallways, Central excise etc,)
and in public and private industry have formed strong trade unions

Bank unions were created to safeguard the interest of bank employees, to campaign in favor of
public sector and to protect and further public interest; to improve service conditions by
effectively using bipartite machinery etc. Activities of bank unions range from organizing
demonstrations, strikes, conferences and looking into matters concerning bank employees.
Demands of these unions range from giving adequate capital to PSBs, stopping privatization and
merger of banks and fighting for various employee welfare schemes.

Organizational Structure of Unions in Banks

In the banking industry, the Trade Union activities are conducted at three principal levels such as
central, state and the branch level. Every bank union is having its central office. These central
level unions are affiliated to some or other national federation. It means that the central office of
a bank union adopts the constitution and rules and bye-laws framed on the uniform lines with
that of national federation to which it is affiliated. Thus, the Trade Unions functioning at the
branch level have to follow the rules and bye-laws framed by their central office union and they
do not have independent and separate constitution. There is overall supervision and control of the
central office of the union over the state level and the branch level unions.

Similarly, the major aspects of economic rewards and working conditions of bank employees are
governed by bipartite settlements between the Indian Banks Association representing the
employers and the major Trade Unions. Therefore, the Trade Unions which are functioning at the
branch level of a bank, mainly deal with the routine matters of employee grievances, provision of
basic amenities etc. In addition to this they are also doing welfare activities for their members.
 Involvement of Unions in Policy making in PSBs

Bank unions associate themselves with policymaking in PSBs at two levels. At a formal level they
have a representative on the board of directors of each PSB. This system came into force after the
nationalisation of banks. The Bank Nationalisation Acts (1970 and 1980) have a provision to
appoint one director each from among the workmen and the officer category of employees. The
persons to be appointed by the government as owner, are generally the principal office-bearers of
recognised unions of workmen and officers. The recognition of a union is accorded by the
management on the basis of its strength; the one with the majority is recognised as sole bargaining
agent for its constituency.

At another level, through the machinery of bipartite discussions both at the industry and the
individual bank, the unions influence the policies. Conventionally, these discussions were limited
to wage issues. But over the years issues like technology upgradation, customer service, business
strategies, prevention of frauds, motivation, skill building, and training have figured in these
meetings.

It is relevant to note that union movements became active and strong much before such formal
participation was accepted. The formal recognition came as a consequence of the activism.
Therefore, the view of the authors that as unions have no representation in policymaking bodies,
the union movement was not strong, is untenable.
 UTTAR BIHAR GRAMIN BANK

Uttar Bihar Gramin Bank is a Regional Rural Bank (RRB) in the State of Bihar, India. It is one of
the largest regional rural banks in India in terms of branch network, staff strength and area of
operation. In the first phase of amalgamation seven Regional Rural Banks, viz; Mithila Kshetriya
Gramin Bank, Madhubani Kshetriya Gramin Bank, Champaran Kshetriya Gramin Bank, Vaishali
Kshetriya Gramin Bank, Saran Kshetriya Gramin Bank, Gopalganj Kshetriya Gramin Bank and
Siwan Kshetriya Gramin Bank had been amalgamated to form Uttar Bihar Kshetriya Gramin
Bank(UBKGB) w.e.f. 1st March, 2006. In the second phase of amalgamation Kosi Kshetriya
Gramin Bank (KKGB) merged with UBKGB w.e.f. 1st May, 2008 and formed Uttar Bihar Gramin
Bank(UBGB). It is sponsored by Central Bank of India in the state of Bihar as a single regional
rural bank. The bank is headquartered in Muzaffarpur. 6

It has its presence in eighteen districts ; Araria, Madhepura, Supaul, Saharsa, Kishanganj,
Katihar, Purnea, Madhubani, Darbhanga, Sitamarhi, Muzaffarpur, Vaishali, East Champaran,
West Champaran, Gopalganj, Siwan, Saran and Sheohar of North Bihar.

The network of 1020 Branches (883 Rural and 137 Semi Urban and Urban Branches) and 3430
BC outlets (Sunahara Sapna Kendras) is controlled by 20 regional offices at Araria, Bagha,
Benipur, Bettiah, Chapra, Darbhanga, Gopalganj, Hajipur, Jhanjharpur, Madhepura, Madhubani,
Motihari North, Motihari South, Muzaffarpur East, Muzaffarpur West, Purnea, Saharsa,
Sitamarhi, Siwan East and Siwan West. For effective functioning of branch outlets and imparting
financial literacy to the rural population, 18 Financial Literacy Centers (FLCs) have been
established in all 18 districts of command area.7

UBGB is the largest RRB in India in terms of customer base, staff strength and branch network.
8
The bank has been playing vital role in the economic development of the region. The bank is on

6
History, Uttar Bihar Gramin Bank, (Oct. 2, 2018, 8:10 PM), http://www.ubgb.in/history.aspx.
7
Id.
8
Id.
an ambitious growth trajectory with massive organizational development initiatives aimed at
being at forefront for bringing about a developmental revolution in its command area.

The bank was awarded for the best performance in banking linkage of self-help groups (SHGs)
in the Regional Rural category, at the state credit seminar organized by National Bank for
Agriculture and Rural Development (NABARD) in 2013.9

9
Vithika Salomi, NABARD puts Bihar’s credit potential in priority sector at Rs. 40,829 Crore, (Oct. 2, 2018, 7:11 PM),
https://timesofindia.indiatimes.com/city/patna/Nabard-puts-Bihars-credit-potential-in-priority-sector-at-Rs-
40829-crore/articleshow/18424132.cms?referral=PM.
 TRADE UNIONS IN UTTAR BIHA GRAMIN BANK

 Uttar Bihar Gramin Bank Employees’ Federation (UBGBEF)

Uttar Bihar Gramin Bank Employees’ Federation (UBGBEF) and Uttar Bihar Gramin Bank
Officers Federation (UBGBOF) are twin majority organizations of Workmen and Officers of Uttar
Bihar Gramin Bank, sponsored by Central Bank of India, functioning under the banner of All India
Gramin Bank Employees’ Association (AIGBEA) & All India Gramin Bank Officers’ Association
(AIGBOA) respectively. UBGBEF & UBGBOF are duly affiliated to All India Bank Employees
Association (AIBEA) & All India Bank Officers Association (AIBOA) correspondingly. Initially,
there were no service regulation for RRBs and respective State Government’s wage structures
were operative in RRB. But, after a long legal fight under the leadership of AIBEA-AIBOA, the
pay parity, on par with corresponding cadres of Sponsor Bank, could be achieved w.e.f 1st
September, 1987.Initially, local recruitments were done at respective RRB level and employees
were having more loyalty to the management. Number of employees were increasing but did not
have the necessary courage to form unions. They saw the workers in the public sector banks
fighting and making some progress in terms of wages and betterment in service conditions. The
RRB employees also gathered some courage here and there and started to organize themselves into
unions in a sporadic way. Firstly, union formed in Champaran and Vaishali RRBs. Some protest
actions and strikes were undertaken but sabotaged by the management. Hence, unrest and
dissatisfaction amongst the employees were fermented and many Unions were formed during the
period. Subsequently, State Federation was also formed in Motihari, in 1982, under the banner of
AIBEA. With the formation of the Unions, there were innumerable agitations, struggles and strikes
in the RRBs and ultimately when UBGB was formed the same sense of trade union prevailed upon.
All the unions operating in RRBs, sponsored by Central Bank of India, amalgamated to form these
two unions. The main objective of these twin organization is to bring RRB and its human resources
in main stream of public sector banking with equal pay structure and service condition. Further,
UBGBEF and UBGBOF have always been governed by its twin policies AIBEA-AIBOA,
“concern for the progress of the banking industry and concern for the betterment of the interests
of banking staff.”10

 All India Bank Employees Association

It is the oldest and largest national TRADE union center of bank employees in India, was founded
in 1946 on the 20th of April in Kolkata. They were being paid paltry wages with no regulated
service conditions at all. It was a rule of hire and fire. Bank employees were groaning but did not
have the necessary courage to form unions. They saw the workers in the factories fighting and
making some progress in terms of wages and betterment in service conditions. Bank employees
also gathered some courage here and there and started to organize themselves into unions in a
sporadic way. Some protest actions and strikes were undertaken but the disputes were referred to
tribunals and employees did not get justice or satisfaction. from 1946 to 1966 - nearly two decades
were the periods of organizing unions and fighting before the Tribunals. From 1966, it has been
an era of consolidation. Bank unions were recognized by the management's and in each bank many
policy issues on recruitment's, transfers and promotions were regulated by mutual agreements.
Along with the struggle for improvements in wages and service conditions, AIBEA also
campaigned for nationalization of Banks. After years of continuous efforts and struggle, AIBEA
achieved its objective when major 14 banks were nationalized in July, 1969. Subsequently in 1980
another set of 6 Banks were nationalized. AIBEA has always been governed by its twin policies -
concern for the progress of the banking industry and concern for the betterment of the interests of
banking staff.11

10
Uttar Bihar Gramin Bank Employees and Officers Federation, (Oct. 2, 2018, 9:57 PM),
http://ubgbeof.org/wp/about-us/.
11
All India Banks Employees Association, (Oct. 2, 2018, 10:23 PM), http://www.aibea.in/.
  Uttar Bihar Gramin Bank SC/ST Employees Welfare Council

It is the trade union of for SC/ST employees of Uttar bihar gramin bank. Its office is located in
Gobarsahi, Muzaffarpur. It is affiliated to AISCTBEF Kolkata and AIGBSCTEWFA
Sikandrabad.

 All India Regional Rural Bank Officers’ Federation (AIRRBOF)

All India Regional Rural Bank Officers' Federation (AIRRBOF), popularly known as AIRRBOF,
has completed its meaningful functioning of more than 30 years. Founded in 1987 at Ranchi, hill
capital of the then Bihar State, AIRRBOF emerged over the period of 30 years as the largest and
overwhelmingly acknowledged as the principal bargaining agent of 47000 officers working in 56
RRBs all over the country. The emergence of AIRRBOF and the resurgence of RRBs are always
in close synergies. The phenomenal growth of RRBs, their consolidation and acknowledgement
as the best suited banking network in the semi urban and rural areas was made possible by the
consistent, motivated and dedicated cadres of AIRRBOF. Then prevalent anarchy, indiscipline
and aversion to work in the 1980’s were replaced by cohesiveness, coherent activities and
camaraderie due to unstinted efforts by the leadership of AIRRBOF. AIRRBOF is the affiliated
body of All India Bank Officers' Confederation (AIBOC) which is the overwhelming majority
organisation of the officers in the Banking Sector. AIBOC always advocated Nation First,
Organisation Next and Individual Last. AIRRBOF vowed to translate the philosophy into
practice. AIBOC & AIRRBOF believes that RRBs are part of Public Sector Banking Industry
and should be integrated by way of transfer of total ownership of RRBs to the respective Sponsor
Banks. The Foundation Conference of AIBOC held in New Delhi in 1985 and that of AIRRBOF
at Ranchi in 1987 resolved to ensure untiring efforts in achievement of complete parity in salary,
allowances & terminal benefits between RRBs and Sponsor Banks. 12

12
All India Regional Rural Bank Officer’s Federation, (Oct 2, 2018, 11:02 PM), http://www.airrbof.org/.
 EMPIRICAL STUDY

A sample survey of nine employees of Uttar Bihar Gramin Bank was taken to collect data and
information regarding role of Trade Unions in Public Sector Banks. These employees belong to
different Trade Unions and through their response reflect upon the functioning and significance
of such unions as well as the perception and expectations of bank employees from their
respective Unions.

Also attached are two different documents:

2. A letter from a particular trade union to the management of the bank mentioning a list of
demands put forward by that Union and its members.

We will analyze these two letters also.

This is a letter from the Head Office of Uttar Bihar Gramin Bank to the General Secretary OF
UBGB Officers Organization. They have invited the representatives of the Union, namely the
General secretary and two office bearers, to hold a meeting and Negotiate with the management
on the demands of both sides.

The management in its letter mentions the norms of a joint discussion between a Trade Union
and bank management. Hence, based on the norms first the issues of the management will be
taken up and then the agendas of the Union. The issues of management include

 Providing copy of affiliation from Central body and Registrar of Trade Unions
 Audited financial statements of union
 Other related issues

Letter 2

The meeting mentioned in Letter 1 was scheduled for 13th August 2018. Before the meeting the
concerned trade union has also put forward its demands by sending a letter to the bank
management. It is a comprehensive list of 43 demands covering issues like accountability policy,
transfers, deputation, vacancy, identity cards, business development meetings, infrastructure ,
ATMs, Mobile banking and E-banking , Pan seeding form , Aadhar seeding , Government
schemes like PMSBY, PMJBY etc.
 ANALYSIS AND CONCLUSION OF EMPRICAL STUDY

 On the issue of role of trade unions in PSBs, all nine employees believe that Tus play a
vital role in protecting the interest of employees as well as public interest. They believe
that Tus are very significant as they work for the welfare of employees and put forward
the problems/suggestions/proposals of both officers and employees in front of the
management in a very effective manner.
 Instances when Union takes up issues of the employees to the employer includes :
Early implementation of Government guidelines and decisions. Human Resource work.
Transfer policy. Wage revision. Healthy work environment. Merger of banks. Bipartite
machinery. Medical treatment. Allowances etc.
 As far as level of negotiations are concerned in most of the cases barring a few their
Unions negotiate with the local management of RRBs. Since all RRBs are members of
Indian Bank Association, their central leaders negotiate with sponsor banks and
government.
 On the issue of response of the employer’s towards the demand of Unions, five (5)
employees believe that employers always respond in a positive, respectful and
responsible manner giving attention to the demands of employees in a proper manner.
Three (3) employees believe that response of employer depends on kind and nature of
demand the Union is making. While one (1) employee believes that the response of
employer always remains negative.
 Employees have varied responses on the issue of presence of grievance redressal
mechanism. One employee responds that this mechanism is available at Regional as well
as Head Office level. Another mentions the presence of Women cell also. Some
employees mention this procedure: “Union gives notice and memorandum to the
Management and the management takes cognizance of the matter and responds. Two
employees spoke negatively about the mechanism while two chose to remain silent.
 On the question of how much time duration it takes to negotiate, resolve a dispute and
conclude : Most employees believe that it depends on the type and nature of
demand/grievance. If the issue is with RRB management it is solved in a few days or
approximately a month but if the negotiations are with a sponsor bank or Government it
 may take months or years depending on the gravity and complexity. While two employee
have responded that such negotiations are very uncertain and take long time to resolve.
 Seven out of nine employees are aware of the election process, by-laws etc of their
Unions. They have even mentioned about the process of elections, conferences, details of
by-laws etc. While one is partially aware about these things and one is not at all ware.
 Around seven employees believe that the attitude of Bank management and Union
towards each other have mostly remained positive, amicable and cooperative. One
employee believes that this is circumstantial depending on the issue while one believes
that their attitude towards each other mostly remains negative.
 Eight out of nine employees believe that the occurrence and time period of strikes are not
at all certain. They are directly dependent on disputes and how quickly the grievances are
redressed. While one employee believes that it generally occurs twice a year for a day or
two.
 As far as the effectiveness of strikes is in question, eight employees believe that theya re
effective in implementation of demands by the management but should be used as the last
resort. While one employee chose to remain silent on the issue.
 Bankers listed the following negative aspects of strike: Financial and reputation loss to
institution. Financial loss and disturbance to public at large. Hindrance to work. Loss of
time and energy. Loss to the exchequer.
But they all believe in the importance a strike has when the demands of employees are
not being met and hence strongly recommend that it should not be banned.