Banks to adopt austerity measures as COVID-19 hits businesses



With their financial position being hit and expected to be hit even harder in the coming months due to the COVID-19 pandemic, banks and financial institutions (BFIs) are falling back on austerity measures including not renewing the agreement of those working on contract basis, reducing allowances of staffs and bringing down the administrative costs.

While a few banks have already stopped renewing agreements of those working on contract basis for fixed terms, others are looking into possible austerity measures in a win-win situation for both banks and the workers.

“Downsizing staff and reducing the salary is the last option and we are not looking into this at present. However, bankers are studying effective austerity measures that could be adopted which will benefit both banks and staffs,” said Bhuwan Dahal, chief executive officer of Sanima Bank and also the president of Nepal Bankers’ Association (NBA) — the umbrella organisation representing 27 commercial banks in Nepal.

NBA has formed a dedicated committee under the coordination of Anukool Bhatnagar, managing director of Nepal SBI Bank, to study possible austerity measures that banks should adopt to cope with the crisis situation. “The committee is expected to submit its report by mid-July and banks will adopt measures recommended by the committee,” informed Dahal.

Dahal informed that ‘work from home’ trend has helped banks reduce operation cost to some extent, especially transportation and fuel-related costs and banks are also exploring other measures to bring down operation cost. “One way that operation cost of banks will come down is by not renewing work agreement of those staffs who are working on contract-basis for fixed term,” he added.

However, Dahal said that austerity measures should be a win-win situation for all parties.

“In the name of reducing operation cost we cannot take decisions that directly affect the livelihood of staffs. It is unfortunate that even big corporate houses booking huge profits are reportedly cutting down staff’s salary and downsizing their employees,” he mentioned.

Meanwhile, bankers are also preparing to reduce the number of ATM booths in a bid to bring down cost. “Several banks have ATM stations that are located at very close distance from one another which might not be required now as people are increasingly preferring digital payment and mobile banking services. Cutting down number of ATMs will bring down operation cost of banks in terms of rent and machine import,” said a banker seeking anonymity.

A version of this article appears in e-paper on June 29, 2020, of The Himalayan Times.

The post Banks to adopt austerity measures as COVID-19 hits businesses appeared first on The Himalayan Times.

Written by Sureis
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