SBI sets a bad trend in outsourcing its routine work

C.P.Krishnan (சி.பி.கிருஷ்ணன்)

State Bank of India (SBI) has come out with a plan to outsource a major portion of its routine work which has all along been performed by regular officers and clerks. For this purpose, SBI intends to float a subsidiary which will be entrusted with all the routine jobs. It is also claimed that this subsidiary will be technology driven with lesser number of staff. It is claimed by the Chairman of SBI that Reserve Bank of India (RBI) has given in-principle approval for this proposal. The main reason attributed for this initiative is to compete with the private banks and to reduce the cost drastically.  It is also claimed by SBI that SBI’s cost to income ratio stands at 53.3% which is much more than that of top three private banks.

It is further learnt that the subsidiary would focus on providing support services mainly for agriculture, micro, small and medium enterprises, other micro loans, data entry operations, activities that can be undertaken as allowed for Business Correspondents, among others.

It is reported by the Chairman, SBI that “core functions cannot be outsourced as per RBI directions”.

What is core function?

From the news item and the interview of the Chairman of SBI, it is clear that the Bank intends to outsource a major portion of its normal work. What is core and what is non-core have not been defined by RBI so far in its policy note on outsourcing. Hence it is left open to the individual bank to interpret the same. Several Bank Managements like Bank of India and Central Bank of India argue that cash related transactions are non-core and hence can be outsourced. Only on that premises they intend to outsource all cash related activities like cash transit from branches to currency chest, vice-versa, currency chest to RBI etc. If cash related job is non-core what else is core?

Huge Hair cut

There is an argument that cost to income ratio stands high; but there is no further split-up figure to show whether the cost is related to the wages of the staff members. Assuming that it is partly related to wages of the staff members, what is the ideal method of reducing this cost to income ratio? Is it by outsourcing the jobs for a cheap labour or by increasing the income? SBI will not think in those terms because it is prepared to lend Rs.12700 crore to Adani Group at 7.1% interest. SBI is the lead bank in many of the consortium advances of the corporates which have failed and thereby huge write-off/ hair cut is undertaken through National Company Law Tribunal (NCLT) under the Act of Insolvency & Bankruptcy Code (IBC). SBI is the leading Bank in allocating huge provisions out of its gross profit apprehending bad loans from the corporates.  SBI is the top bank in writing off lakhs of crores of rupees of corporate loans. Hence SBI has shut many of their ways to increase its income.  That is why the authorities resort to cost cutting through exploitation of labour.

Setting a bad trend

RBI, in its policy note on outsourcing has categorized many risks attached with outsourcing including reputation risk. Let SBI bear that in mind before taking any decision in this regard. The attempt of SBI to outsource its routine work will automatically reduce its staff strength drastically. The doors for future employment are likely to be shut. This will deprive lakhs of youth who expect a dignified job with job security, leave and statutory superannuation benefits etc. The social justice will be greatly affected. Other Public Sector Banks would eventually attempt to follow the footsteps of SBI which is setting a bad trend. This will create great unrest in the society. Hence the Trade Unions and democratic forces have to join hands to oppose this at this stage itself.


  1. மிக தெளிவான கட்டுரை…. அயல் பணி முறைகளுக்கு எதிரான இயக்கம் முன்னெடுக்க பட வேண்டும்….

  2. I don’t know when from third party administer in insurance industry came to existance, this subsidiary is similar to that. Various methods of exploitations are put in trial in SBI and extended to other banks.

  3. It seems finally central govt capitalistic policy entered banking sector thru sbi. My questions are.1. Why to compare with private bank cost ratio. 2. Reasons for outsourcing is not made clear. 3. Capitalistic approach is failed in Europe and US. Then y 2 follow that. 4. By privatising every industry the govt is tightening the throat and stomach of 70 percent people. 5. Every customer will be made to pay for every service hence lower strata of society will be denied banking service gradually. Sbi must think in long-term health of banking industry n top brazes shouldn’t think of their own wellbeing in selfish way. Hope good sense prevails. Jai hind.

  4. These sort of attempts is to be nipped in the bud. This is the vital issue on which the entire bank employees movement has to focus. The author has rightly given a warning signal.

  5. This is really true. Work pressure is very high as number of staffs strength is very low.

  6. It is unfortunate and unhealthy trend. We expected under the leader ship of Modi dignifief employement wil b created. Irrespective of cadres and unions all have to fight before it gets implemented.

  7. தவிடு தின்னும் ராஜாவுக்கு முறம் பிடிக்கும் மந்திரி ?
    ஒப்பந்த இராணுவ வீரர் என்கிற ஒன்றிய அரசுக்கு….. வங்கி வேலையை வெளியே துரத்திவிடும் நிதி நிறுவனம் பாரத ஸ்டேட் வங்கி ?
    வங்கி ஊழியர்கள் இந்த கொள்கையை எதிர்க்க முன்வர வேண்டும் 🙏

  8. Outsourcing of retired employees to be withdrawn. It’s adding fuel to fire as existing unemployment is at its peak.

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