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Marudhara Gramin Bank strike shows resentment against cross-selling of mutual fund, insurance products

Krishnanand Tripathi
SBI, Rajasthan Marudhara Gramin Bank, Cross Selling of Third Party Products

Marudhara Gramin Bank Strike: A deep resentment is brewing among bank staff over the practice of cross-selling of third party products like mutual funds, insurance products and credit cards among others. Insurance, mutual fund companies have tied up with public sector banks to take advantage of their expansive branch network and large employee base. These companies offer a commission to the banks for cross-selling of their products but bank staff complaints that it affects their routine work. Recently, nearly 2,000 employees of Rajasthan Marudhara Gramin Bank observed a two-week-long strike against the practice. The bank is a joint venture between the government of India, Rajasthan government and State Bank of India. Employees of the bank called off the strike following a conciliation meeting with the regional labour commissioner who asked the bank management to look into their demands.

"The strike was called off on Thursday following a conciliation meeting between the bank management and employee unions at the regional labour commissioner’s office," said a senior office-bearer of All India Gramin Bank Officers Organisation.

This is the first large scale protest by the staff of a public sector bank against the practice of cross-selling of third party products through bank employees. The strike that started with two districts Ganga Nagar and Hanuman Garh on October 4 finally expanded to nearly 20 cities in the Rajasthan, affecting 80% of the total over 700 branches. According to the sources, nearly 70 per cent of the bank branches were completely shut while the work on 10 per cent was severely affected.

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"We decided to take up the issue as the bank employees were forced to sell these products. We are not against selling these products as a government circular is there. But those employees who could not meet the target were humiliated and punished. This should stop," he told Financial Express Online.

"Our customers are from rural areas, basically farmers, they don’t need this kind of products," he said while requesting not to be named.

In fact, the demand to immediately stop selling of insurance products and mutual fund products was at the top of the 28 demands in the memorandum submitted by the unions of Rajasthan Marudhara Gramin Bank, a copy of which was reviewed by Financial Express Online.

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According to the banking industry sources, the cross-selling of third party insurance, investment products through bank branches has taken strong roots in the industry. They say there is so much pressure to sell third party products that it is affecting normal banking operations like mobilisation of deposits or giving loans and recovery of bad loans.

"Senior bank officers directly call bank managers at the branch level, asking them to meet the target," said Ashwani Rana, former general secretary of National Organisation of Bank Workers.

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"This is the first instance when resentment has come out in open in the form of a strike in one bank. If the banking sector regulator RBI and the government do not take corrective measures then the situation will further aggravate," he told Financial Express Online.