Finance minister to pacify striking bank employees

NEW DELHI — Even as 500,000 bank employees across the country went on a strike on Friday to protest the central bank’s move to outsource some banking functions, Finance Minister P. Chidambaram said only some non-core services will be passed on to outside agencies.


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Published: Sun 30 Jul 2006, 10:47 AM

Last updated: Sat 4 Apr 2015, 1:12 PM

Replying to a calling attention motion moved by the Communist Party of India (CPI)’s Gurudas Dasgupta in the Lok Sabha over the Reserve Bank of India (RBI) decision, Chidambaram said there would be a well-defined policy on outsourcing.

Clarifying that the RBI has only issued draft guidelines, the finance minister said the move was to regulate outsourcing activities to ensure that only those areas in which banks do not have the expertise are given outside so that they can derive cost advantages.

But the left parties, led by the Communist Party of India-Marxist (CPI-M), walked out alleging that the government was trying to outsource most banking activities to private parties.

“This is nothing but backdoor privatisation,” Dasgupta said, even as the finance minister said the Left Front’s fears were “premature conclusions.”

In terms of the RBI guidelines, banks cannot outsource functions like corporate planning, organisation, decision-making functions, know-your-customer norms for opening accounts, sanction of loans and portfolio management, he said.

According to the minister, the services that could be outsourced are application processing for loan origination, credit card etc, marketing and research, data processing and back office related activities.

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