Mumbai: India’s largest private sector lender, ICICI Bank Ltd, has issued to some employees inducted from the erstwhile Bank of Rajasthan (BoR) contracts that will end without any prior notice at the end of a five-year term regardless of the age of the employee.
The BoR employees see this as a strategy to lay off excess staff after five years.
Of the nearly 4,000 employees of BoR who are now with ICICI Bank, around 400 have been given such contracts, according to two executives familiar with the matter. One of them is a former BoR (and now ICICI Bank) executive and the other, a senior executive of BoR, who resigned recently. Both asked not to be identified given the sensitivities involved.
According to these contracts, their terms will end at the end of five years or when they reach the age of 60 “whichever is earlier”. Mint has reviewed a copy of one such contract. Of the 400 who have been given such contracts, nearly 75 are senior executives in BoR such as general managers, assistant general managers, according to one of the executives.
Meanwhile, 45 BoR employees at junior levels have quit in the last one-and-a-half months, this person added.
The merger of ICICI Bank and Jaipur-based BoR came into effect from 13 August after the Reserve Bank of India notified it.
The merger took place through a share-swap deal that valued BoR at around Rs3,000 crore, at a ratio of 4.72 shares of BoR for one share of ICICI Bank. The newly inducted BoR staff are yet to be given new functional responsibilities in ICICI bank and are continuing in their old roles.
An email sent to ICICI Bank asking about the five-year contract and job security of the former BoR employees remained unanswered.
The contract also prohibits senior executives from joining “any banking or financial services company for a period of six months from the date of resignation/termination”.
BoR employees were issued their contracts in mid-August and in September; these also warn that the bank will initiate “appropriate action” to deal with employees resorting to union activities or trying to bring “any outside influence”, to address their contractual issues. “The employees were left with no choice but to accept the terms of the agreements. It clearly implies that even in the case of any threat to their job, employees will not have the support from any of the earlier protection agreement from Indian Banks Association (IBA) or their own staff unions,” said a third executive who was formerly employed by BoR, and who too did not wish to be identified.
BoR staff, whose average age is 50, used to enjoy the backing of their own employee unions and the IBA, a national bankers’ lobby, in matters such as compensation and job security. BoR had two employee unions—the All India Bank of Rajasthan Officers Association and the All India Bank of Rajasthan Employees Union. After the merger, all unions have been dissolved.
In the past, ICICI Bank had acquired two other old private banks—Bank of Madura Ltd and Sangli Bank Ltd. It now employs at least 53,000 people. In May, the bank’s managing director and CEO Chanda Kochhar had said it would not lay off BoR staff or discriminate against them.
“Whenever we do a merger and acquisition, we treat the employees of the acquired bank as a part of our parivar (family), we will take care of them (BoR employees) as our own employees; we are not here to retrench people,” Kochhar had said.
Shiv Agrawal, chief executive officer of recruitment firm ABC Consultants Pvt. Ltd, said ICICI Bank has, through the contracts, given a clear message to the erstwhile BoR staff that their new roles may not be a long-term career option.
“Ideally, from the point of view of an employee, the message from this contract is that this (the job) is not a good option for them in the long term. However, in the current market scenario, a five-year term gives enough time for the employees to think about other career options.”
A human resource consultant, who asked not to be identified, said any integration process is complex and “cannot make everybody happy”. He added, “ICICI Bank is offering them a five-year contract and they will have enough time to look around for jobs.”