Impact of SBI strike
Indian Express, 7 April 2006
Why is the SBI strike causing so much discomfort?
SBI accounts for 20 percent of bank deposits in the country. This
means that one fifth of the business of banking gets done through
SBI. Though this is (thankfully) lower than the 36 percent share SBI
had in 1991, it is still large enough to cause enough
How will the strike impact SBI consumers?
First, cash withdrawls from bank branches are not possible. SBI
handles about 90 percent of government salary payments. These
employees cannot withdraw their salaries from SBI unless arrangements
are made to do it through other banks.
About 9000 branches of SBI are shut indefinitely due to the strike and
customers are at a loss about when they can get their money.
Second, SBI has around 6000 ATM which are also running out of cash. A
significant amount of withdrawls takes place through them. In
2004-05 Rs 3133 crore was withdrawn through these ATMs. Arrangements
are being made with associate banks to allow customers to withdrawl
cash from their ATMs.
Cheques paid by SBI customers to other agencies, for example, to pay
their electricity, water or credit card dues will not be cleared and
payments will therefore be delayed. It is not clear who will bear the
brunt of the late fee and interest charges. In all probability, it will
be the customer.
How will cheque clearing be hit?
RBI has taken over cheque clearing in the major centres SBI was
handling. Despite this it has been reported that 10 to 15 percent of
cheque clearing activity has been hit.
How will the strike affect foreign exchange markets?
SBI has a market share of nearly one fourth of the foreign exchange
market. In 2004-05 SBI recorded a total turnover of nearly Rs 3.5 lakh
crore in its foreign exchange business. All foreign exchange business
normally taking place through SBI will be stalled.