A nationwide bank strike hit India on Friday as unions rebelled against proposals to allow more private ownership of state banking behemoths that could threaten jobs and benefits.
India, the third-largest economy in Asia, has struggled to reform and liberalise key sectors like banking, retail and insurance in recent years, partly given widespread fears of exploitation of local interests by aggressive foreign investors.
The United Forum of Bank Unions which is organising the strike said it would involve one million employees from 70,000 bank branches, 26 public sector banks including the State Bank of India, and 26 private sector banks.
"It is a nationwide strike. All branches have been closed down. The strike will affect every segment of the banking industry," Vishwas Utagi, the secretary of the United Forum of Bank Unions said.
"(The strike) isn't for any of the economic demands of the present workforce. It is for the preservation of the economic sovereignty of the nation," added the left-leaning umbrella of unions that organised the one day strike.
Analysts said many banking operations would be untroubled by the strike, with several of India's new generation of privately owned banks not involved, including ICICI Bank, HDFC Bank, YES Bank and Kotak Mahindra Bank.
Trading in bonds, foreign exchange and stocks was largely unaffected.
"If it's just one day what happens is the system broadly adjusts, one day's operations get shut down and then a lot of transactions get postponed to Saturday," said J.P. Morgan banking analyst Seshadri Sen. "There are some issues but broadly it doesn't destabilise the system."
It was not immediately possible to verify the scale of the strikes though in some Mumbai suburbs, bank branches were shut as thousands of employees, many brandishing red banners, congregated in a large protest rally at Azad Maidan, a sprawling ground in south Mumbai, India's financial capital.
India's state-run banks dominate around 70 percent of the country's banking sector, but inefficient practices, bloated workforces and generous pension schemes for lifelong employees have stoked calls for an injection of private sector capital to overhaul and reinvigorate them.
Foreign ownership of Indian banks is capped at 20 percent.
Unions are opposed to proposals now being deliberated by the government that would reduce the government stake in public sector banks from 51 percent to 33 percent.