MUMBAI, June 18: The finance ministry is drawing up a plan to prevent the proposed indefinite strike at the State Bank of India which, if it materialises, could bring the entire payments system in the country to a grinding halt.

According to sources in New Delhi, the ministry has directed the SBI management to avert the indefinite strike, called from June 26, at any cost in view of the crisis that will overtake the economy once the 9,000-and-odd SBI branches across the country down shutters. The strike has been called to protest the suspension of three executives of the Mumbai main branch in the CRB case.

"Customers and corporate houses apart, almost all the state governments and the major public sector undertakings will be hit if the SBI officers' bodies stick to the stand of going ahead with the indefinite strike," a ministry source said. The last round of discussions which took place tonight in Calcutta failed to thrash out the differences between the management and the agitating unions.

As a warming up exercise, all the local head offices (LHO) of the 13 SBI circles will go on strike on Thursday (today) when the bank's central board will meet in Calcutta to finalise the 1996-97 accounts. Thus far the stir has been restricted to the Maharashtra and Goa regions.

Among others, two mega public sector undertakings—Coal India and Indian Railways—will not be able to clear the wages of a sizable section of their employees which may lead to industrial unrest, sources said. The countrywide strike will affect both the central and state governments' collection of taxes.

"So far only Maharashtra has been affected. Once the stir goes national, all state governments will face an enormous payments crisis as the SBI is banker to almost all the state governments," a government official said.

In states like Goa and Sikkim, Union Terrritories like Andaman and Nicobar Islands and Pondicherry and the entire north-east, barring Guwahati, the RBI has no presence and hence all state government transactions are conducted by the SBI. Even in those state capitals where the Reserve Bank of India has its offices, there will be problems in clearing the salary and wages of government employees as the RBI offices have a very limited reach. "Had there been any (formal) strike notice, we could have made some alternative arrangements with some other banks. Since it was a flash strike, we have been caught unwares," the government official said. The flash strike took place on June 10 following the suspension of three officials on June 9.

The finance departments in some of the states have approached other nationalised banks to tide over the impending crisis.

The worst affected will be the defence establishments. "In remote areas of Jammu & Kashmir, Ladakh and the north-east, all defence payments are made by the State Bank. There is no way we can make any alternative arrangement," sources in the ministry said.

Besides, since the State Bank of India is the only bank to handle all the provident fund accounts in the country, business houses and PF subscribers will face problems in transacting their funds through SBI. Business houses, which are statutorily required to deposit their employees' PF deductions with SBI before June 15, will now face penal action from the PF authorities. Cheques and drafts drawn on SBI were not accepted by other banks for clearing purposes due to the ongoing strike. The managing committee of the Indian Merchants' Chamber has described the strike as "ill-advised, anti-business and anti-people".

There will be an impact on the country's trade as well. With SBI activities slowing down in some centres like Maharashtra and Goa, exporters are already finding it difficult to negotiate their export bills and importers may have to pay demurrage at ports for failure to clear goods in time.

The State Bank has already sent notices to its corporate clents pleading helplessness about the "development". "Those corporates which have multiple banking arrangments may not have much difficulty. However, those which have SBI as the sole banker are facing problems as they have not been able to operate their borrowal accounts," one senior banker said.

According to SBI sources, a compromise is likely to be worked out between the management and the officers' body at the instance of the finance ministry. SBI chairman MS Verma has already agreed to lift the suspension order within 90 days. However, the unions refused to lift the strike on the basis of this assurance.

If no agreement is reached, the indefinite strike proposed from June 26 will be the first major confrontation between employees and management since 1969, when SBI staff went on an indefinite strike that lasted 12 days. That strike threw the country's economy off gear. On that occasion also, the strike started on June 10 and after a five-day strike in Maharashtra, it spilled over to the rest of the country in protest against the suspension of four executives for their involvement in trade union activities. The then finance minister Morarji Desai backed SBI chairman RK Talwar to the hilt to foil the strike. In the end, prime minister Indira Gandhi had to intervene and the SBI management had to succumb to the pressure of the unions in the greater interest of the country's economy.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.