Muthoot Finance Employees’ Strike Enters 14th Day, Management Remains Vindictive

As the indefinite hunger strike of Muthoot Finances employees has entered 14th day, the management has allegedly been trying to dismantle the strike. The employees of Muthoot Finance, under the banner of Non Banking and Private Finance Association (NBPFA) [of which Muthoot Finance Employees Union (MFEU) is a part], have started the indefinite strike since January 2 this year.

The illegal termination of as many as 166 workers without serving even a notice has led to this strike. Employees say that the termination is a revenge by the management, as the workers had led a 52-day strike from August 20 last year. Along with the termination of employees, the management had declared closure of 43 branches across the state.

Meanwhile, the management has openly declared a war against the union, which is affiliated to the Centre of Indian Trade Unions (CITU). It has advertised in leading Malayalam dailies including Malayala Manorama and Mathrubhumi that the current events are not just a strike, but a ‘violent activity’ to stop the functioning of branches.

The workers, however, have clear answers for the allegations raised by the management through the paid advertisement. “They allege that we are unleashing violence in the name of strike. We, as the union affiliated to CITU, get support from other organisations. And the strike is all about the life of the workers. The management tries to destroy the union and unionisation of workers. We know that the management will go for termination of more employees who are active in the union. If we sit silently, what would be happening in the future?” asks Nisha K Jayan, of MFEU, who was terminated along with 165 others.

Read more: Muthoot Finance: Employees Go on Indefinite Strike over Illegal Termination

The management argues that since it is a public limited company with 28% of its shares owned by public, it has decided to close the 43 unprofitable branches as per the recommendations of the board that includes independent directors. The management also says that the total turnover of the company in the state has come down to Rs 1,200 crore in 2019 from Rs 2,650 crore in 2016 and that the workers’ strikes are accountable for this loss.

The employees say that these arguments are baseless and that there is strict monitoring from the Reserve Bank of India (RBI), especially after the IL&FS case. Earlier, the non-banking financial companies used to take loans with the interest rate between 5% and 6% from scheduled banks. But when the issue of IL&FS surfaced, strict conditions were introduced to make loans available for non-banking financial companies.

So, in 2018 and 2019, the company had faced a fund shortage and it automatically affected the services of the company. For example, initially, in case of gold loans, the company used to give 70% of the market price. But because of the fund shortage, the loan amount was reduced. It has nothing to do with the strike of the workers, explain workers.

Read more: Muthoot Finance Fires 166 Employees Including Union Members

CITU state secretary and parliamentarian Elamaram Kareem also explained how the management tries to place the blame on the employees. He said, “The collapse of IL&FS had clearly affected the non-banking finance companies. The NBFCs that sustained with the blood of common people by giving gold loans with interest rates up to 26% have been facing business loss for the past two years because of strict conditions.”

Other services of the company include non-convertible debentures (NCDs)—deposits from the customers. Now, the company relies on NCDs, said Nisha. The company has 4500 branches in total and the operational cost of these branches are very high and naturally it is difficulty to manage only with the NCDs. These crises affected the service of Muthoot and obviously customers have gone for other options too.

Explaining the situation that has led to the strike in 2016, Nisha said: “In 2016, the management had transferred 125 employees because they had formed a union. The management has dragged us into this situation unnecessarily.”

“The 43 branches that have been closed down are not the ones that are facing losses. The closed branches would include the ones with Rs 9 crore turnover a year—which is average turnover of one branch of the company. Interestingly, the branches which have lesser turnover than these 43 branches have not been included in the list of closed branches. The management selectively targeted the branches where the secretary and other active members of the union work. It is nothing but revenge,” Kareem added.

Read more: Victimisation, Media Trial and Struggle of Muthoot Finance Employees