Finance Ministry Requests Exemption for Banks
The Finance Ministry has formally urged all state governments to exempt banks from the provisions of the Shop and Establishment (S&E) Act. This initiative follows concerns raised by banks regarding attempts by some state governments to impose labour law regulations that conflict with the unique operational framework of financial institutions.
Banks’ Compliance with RBI Regulations
Highlighting the issue, the Indian Banks’ Association (IBA) noted that banks are already governed by the Reserve Bank of India’s stringent guidelines, which encompass operational and labour-related practices. Given their status as regulated entities, the IBA emphasized that applying the S&E Act adds unnecessary regulatory overlap and complexity.
State Governments Express Support
Responding to the concerns, the Finance Ministry contacted state governments to seek their cooperation in exempting banks from the Act. According to ministry officials, most states are supportive of the proposal, acknowledging the distinct regulatory ecosystem under which banks operate.
Rationale Behind the Move
Banks contend that their operations do not align with traditional establishments covered by the S&E Act. Labor laws under the Act often impose redundant or incompatible conditions with banking practices. By granting exemptions, the government aims to streamline operational compliance and eliminate potential conflicts between state-specific labor regulations and central banking guidelines.
