Saturday Holidays in Banks Getting Momentum? (Status - New Update)

In the 10th Bipartite meeting, it was agreed that 2nd and 4th saturdays will be full holidays in banks and rest of the saturdays will be full working days.

It's been more than two months since that meeting and we are yet to see any progress on that.

On April 4, 2015 - Indian Express posted this article "RBI nixed bank plan for additional holidays on alternate Saturdays"

The Reserve Bank of India has nixed a plan for additional bank holidays on alternate Saturdays. The banking sector regulator feels that the infrastructure for keeping key deposit related functions need to be strengthened before the banks can down shutters to enjoy a five day week.Recently the public sector banks, including State Bank of India had decided they will remain shut on alternate Saturdays as part of a deal reached between employee unions and the Indian Banks Association.While staff matters are usually decided at the level of the banks or at best that of the Indian Banks Association the apex body of bankers, since this involved a change in banking practices a reference was made to the RBI. The RBI has, however, told SBI it would need more time to study the implications before coming to a decision, said a source at the regulator.

The employee unions at the public sector banks have for long been demanding a five day week as part of their wage settlement. After the meeting with the IBA in February this year, an agency report quoted AIBEA general secretary C H Venkatachalam to say; “Our long pending demand of holiday on second and fourth Saturdays for the bank employees have also been reached”.The wage related deal was sewn up between the bank managements and the workers just before the tabling of the Union Budget this year averting a national strike. There are about a million employees in all scheduled commercial banks in India as per RBI statistics. Of these about 0.75 million are in the public sector banks. The deal between the state run banks and their employees is likely to impact working hours in private and other banks in India too.Since the new financial year began from April 1, SBI had sent the reference to RBI to clear the new holiday schedule. The bank employees have argued that as the stock markets and clearing houses remain closed over the weekend, it made little sense to keep the banks open on Saturdays. The compromise of the alternate Saturdays as a day off for the banks is meant to gauge the extent of pressure if the banks follow a five day week.With the RBI not willing to clear it soon the banks face the prospect of losing a bargaining chip with the unions. It approved late the banks will have to make a mid-year change in the holiday schedules. 

Below we are sharing the extracts from two recent circulars issued by C.H. Venkatachalam,  General Secretary of AIBEA:-

Circular letter No. 27/121/2015/17  dated 19th March, 2015 :-

“Working Hours are service conditions which are part of the provisions of Bipartite Settlement. The relevant provisions have to be duly amended at the time of full-fledged settlement. Negotiable Instruments Act has to be amended and RBI also has to issue revised instruction on banking hours. In the meantime, based on our Minutes of Discussions, IBA has taken up the issue with the Government and RBI for due changes pending amendment to our Settlement. 2 Saturdays as holidays can be implemented only after completing these formalities. Hence units would appreciate that all these procedures would take some time”

Circular letter No 27/122/2015/18 dated 2nd April, 2015:-

“The MoD has to be translated into regular Settlement under the I.D Act amending the existing provisions regarding working hours. Further change of holiday in Banks also needs official changes in the regulations by RBI and some amendment to the Negotiable Instruments Act. All these issues have been taken up by IBA with the concerned authorities in RBI and Government. Without completing and complying with these formalities, the holidays in Banks cannot be changed. 

Further, our units should be aware that our Settlement would cover only 45 Banks whereas there are other Banks which are outside IBA and also not covered by our Settlement. Even amongst the 45 Banks, in the case of foreign Banks, only workmen are covered by their mandate to IBA and not officers. Hence there are technical issues to be dealt with before implementing the change of holidays. All such issues have to be sorted out before the new holiday system is introduced”.

Then again , on April 28, 2015 - The Hindu Business Line posted an article about the views shared by IBA on excessive holidays in banks, "Holidays declared by States are excessive: IBA"

Indian Banks’ Association (IBA) feels that bank holidays declared under the Negotiable Instruments Act, 1881, by various States are ‘excessive’ and need to be rationalised.
A meeting of the managing committee of the IBA, which represents management of member banks, is learnt to have made known its view during discussions on ringing in a five-day week in the banking sector.
Consensus ready
It may be recalled that as part of the wage revision under the 10th bipartite settlement, a memorandum of understanding was signed on February 23 between the IBA and workmen unions/officer associations. A consensus was arrived at that every second and fourth Saturdays of the month will be holidays and the other Saturdays will be full working days for bank branches/offices.
The matter was discussed in the managing committee of the IBA (represented by public sector banks, private sector banks, foreign banks and cooperative banks) at its meeting on April 7.
After detailed deliberations, the members agreed that there was a case for implementation of a five-day week in banks.
This would require that clearing houses, RTGS/NEFT and currency chests are also closed on second and fourth Saturdays.
The IBA has already taken up the matter with the Reserve Bank of India seeking its consent to enable it to take up the matter with the Government and the Finance Ministry for issuing necessary Gazette notification. It was here that the IBA managing committee felt that holidays declared under the Negotiable Instruments Act, 1881, by various State Governments needed to be rationalised.
The committee felt that the IBA may take up with the Centre the case for rationalisation of bank holidays under the Act.
The IBA’s line of thought was given expression in a letter to the sponsor banks of regional rural banks, seeking their view on having second and fourth Saturdays as holidays and other Saturdays as full working days.
Their input will help usher in uniformity across the industry and ‘enable us at the earliest to proceed further in the matter,’ the letter said.
It went on to add that “we have already taken up the matter regarding rationalisation of bank holidays under the Negotiable Instruments Act with the Finance Ministry.
“We have also requested the Reserve Bank to consider suspension of clearing functions and RTGS/NEFT on second and fourth Saturdays and have full-day clearing services on other Saturdays like any other weekday.”

Conclusion:

(a)       The saturdays holidays will only be implemented after final settlement is signed between IBA and UFBU under the ID Act whereby the existing provisions of working hours have to be changed;

(b)            Negotiable Instruments Act needs to be amended.

(c)             RBI needs to change its regulations.

(d)    Other technical issues such as leftover  banks (i.e. which are not members of IBA)  to fall in line with the revised working hours / days.

(e)     I feel that it will be a long drawn process and thus bankers should NOT expect 2nd and 4th Saturdays holidays at least in the very near future.

(f)      And regarding the reduction of number of holidays under NI act, some years back also, RBI restricted public holidays for banks to 15 days uniformly but it was relaxed few years later. Holidays under NI act differs from state to state such as Tamil Nadu has usually maximum number of holidays.

Do share your views in the comments.

Update(May 25, 2015) As Per AIBEA: In terms of understanding dated 23rd February 2015 reached between IBA and Workmen Unions, every second and fourth Saturday of the month will be a holiday and other Saturdays will be full working days. IBA has initiated steps to get clearances from the Reserve Bank of India and Government of India. The change will be effective after approval by the Reserve Bank of India and Notification of the change issued by the Government of India.