Appointment of Committee to look into the Bank Pensioners issues by the Parliament Committee on Public Grievance Personnel & Pension, Law&Justice

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S. RamaChandran

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The Parliament Committee on Public Grievance Personnel & Pension, Law & Justice has on 17th Feb, 2016 appointed a committee comprising Secretary, DFS , CMD of SBI & an HRD expert to look into Bank"s Pensioners issue, terms of reference, time frame etc. In this connection, we give below a letter sent by Mr. S Ramachandran, former General Manager at Bank of Baroda on 27th march,2015, to SHRI HASMUKH ADHIA, then Secretary, DFS with a copy to our Finance Minister on the illegal, arbitrary denial of various constitutional rights of pensioners which is violative of Article 14&16 of Constitution of India, which may help the committee to discuss the issues to do justice to bank retirees.

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Letter Transcript

To
Shri Hasmukh Adhia,
Secretary, Departmental of Financial Services,
Ministry of Finance, Jeevan Deep Building,
3rd Floor, 10, Parliament Street,
New Delhi -100001.

27th March, 2015

DEAR SIR,

RE- ILLEGAL ARBITRARY DENIAL OF

1. 100%DA NEUTRALIZATION TO SENIOR CITIZENS WHO RETIRED FROM THE BANKS SERVICE PRIOR TO NOVEMBER 2002.

2. DENIAL 0F FAMILY PENSION AS PAID TO GOVT. AND RBI EMPLOYEES

3. DENIAL OF PENSION UPDATION FROM TIME TO TIME AS GIVEN TO GOVT. AND RBI EMPLOYEES WHICH IS VIOLATIVE OF ARTICLE 14 AND16 OF THE CONSTITUTION OF INDIA.

4. Protection of Bank employees' interest under Banks Nationalization Act, namely The Banking Companies (acquisition and transfer of undertakings) Act, 1970 and

5. Honouring the Memorandum of Settlement dated 19.10.1993 between IBA and Officers Associations and Workmen Unions in toto.

In continuation of my letter dated 24^th Feb,2015 & 20^th march 2015 on the above subject which was delivered to your office on 27^th Feb,2015 & 24^th March respectively, I would like to state as under:

01. The Section 10(7) of Banking Companies (Acquisition and Transfer of Undertakings Act, 1970) says:

After making provision for bad and doubtful debts, depreciation in assets, contributions to staff and superannuation funds and all other matters for which provision is necessary under any law, or which are usually provided for by banking companies, a corresponding new bank [may out of its net profits deal are a dividend and retain the surplus if any.

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This section and sub section says that after making provision for
a. for bad and doubtful debts,
b. depreciations in assets,
c. contribution to staff and superannuation funds
d. and all other matters for which provision is necessary under any law, or which are usually provided for by banking companies and then the net profits arrived thereafter can be appropriated towards dividends. Therefore, the staff cost and superannuation funds ranks first among other things over the dividend to the owner.

Provisions for bad and doubtful debts, depreciation on assets, staff cost with superannuation benefits and other provisions under law, are not subordinate to each other but they are all at par with each other. Now, what has been practicing is provisions for debts, depreciation and other provisions are provided even if there is impact on reserves and capitals of the banks. However, the staff cost with superannuation benefits, which is also at par with other provisions referred above, is neglected by the men in top of the affairs of the banks. The Parliament of the country and country, while taking over the banks by nationalizing them, protected interests of the bank employees by passing legislation as above. The Parliament of the country speaks the will of the people of the country. When the will of people of the country is to protect the interest of the bank employees in such a manner, wherein their staff cost and superannuation benefits prevail over the net profits, the negotiating team representing the banks, cannot take a stand that there are no adequate profits, paying capacity of the banks is not sufficient. The present stand taken by the IBA and its member banks is against the Constitutional guarantees and protection given to the bank employees at the time of Nationalization of Bank on 19.07.1969.

The position of performance of Public Sector Banks as under for the last 3 years.

( as per IBA site) Rs. in crores.

Banks	Operating Profit			Provisions and contingencies			Net profit
	2012	2013	2014	2012	2013	2014	2012	2013	2014
Nationalised banks	72498	76573	81474	40352	45657	59257	32149	30917	22217
SB group	8214	8725	8368	4588	5047	5591	3626	3678	2777
IDBl	4050	5458	5681	2018	3576	4560	2032	1882	1121
Total	84762	90756	95523	46958	54280	69408	37807	36477	26115
SBI	31574	31082	32109	19866	16977	21218	11707	14105	10891
Total	116336	121838	127632	66824	71257	90626	49514	50582	37006
Total as per IBA	116335	121838	127633	66823	71256	90626	49514	50583	37007

However the staff expenses including superannuation benefits and Depreciation on assets are not available separately as they are all included in Operative Expense

Rs. in crores.

PARTICULARS	2012	2013	2014
Deposits	5002013	5745697	6588934
Investments	1507270	1759056	1973285
Advances	3877307	4472845	5101054
Total assets	6039620	6961988	7966550
Gross NPA	117262	164462	227264
Net NPA	59162	89950	130360

From the above table, one can understand, the operating profit is increasing despite increase Gross and Net NPAs, which are not yielding any interest from the date of their NPA status. Further, the provisions are increasing and net profit are declining, due to increase in Gross NPAs and Net NPAs. So the major portion of operating profit is eaten away by these NPAs. The Gross NPAs have almost doubled in two years period from Rs. 117262 crores to 227264 crores during 2012 to 2014 and Net NPAs have more than doubled in two years period from Rs. 59162 crores to 130360 crores, during 2012 to 2014.

However the IBA represented by serving CMD of a bank as Chairman of IBA and Retired executive of the Bank Mr. Thankasale and executive of IBA Mr. Unnikrishnan without banking experience, are keeping mum on this issue and conversely making loud noise on wage revision to the bank officers and workmen. Incidentally and interestingly, our UFBU old and tired horses, are also keeping mum on this serious issue, in which low level staff are not involved in this huge NPAs, for their own compelling reasons.

Coming to the provisions as per section 10 (7) of Banking Companies ( acquisition and transfer of undertakings) Act 1970, tabular form as under gives better clarity.

Sr. No.	Provision on	Status prevailing now
1	for bad and doubtful debts	Provisions provided as per RBI directives, but identification of bad and doubtful debts were not strict and only on bad debts interest was not charged. But after introduction reforms, NPAs are well defined, interest not being charged from the date of NPA status, Rate of provision for different types of NPAs is well defined and even on standard assets, provision is made as per international standards There is no debate or discussion on this subject, it is automatic so to say, the provisions are mandatory even without adequate operating profits. Further resultant net loss, can embark into reserves and capital of the banks. The sections say provision only for bad and doubtful debts, which are loss and doubtful assets. But the situation is the law does not recognize provision for sub standard and standard assets. These are made due to RBI guidelines. But legally and constitutionally speaking Law prevails over RBI guidelines, unless Law is suitably amended. However, logically, it is too much for the employees to bear the provisions on standard assets, when the question of wage revision comes, the IBA is harping on net profits of the bank, rather harping on operating profits as per this section.
2.	Depreciation in assets	Same is the position, well defined, Even Income Tax department has a say on provision on Depreciation. There is no debate or discussion on this subject; it is automatic so to say, the provisions are mandatory even without adequate operating profits. Further resultant net loss, can embark into reserves and capital
3	all other matters for which provision is necessary under any law, or which are usually provided for by banking companies	Again no question of discussion and debate on these matters which are necessary under law or a practice in vogue. It is only for automatic compliance by the bank.
4	contribution to staff and superannuation funds	This item, though it is at par with the above items where provisions are made mandatorily, banks are not following in letter and spirit of the law passed by the Parliament of the country. Labour has become very cheap for the men who are at the top. Though staff cost and superannuation benefit has prior charge over the net profits of the bank, it is not being followed by the dictatorial attitude of IBA and ignorant and hapless old and tired, ineffective horses of UFBU, leaving the serving and retired employees in misery. Like other 3 matters, where provisions are well defined, the provision for staff matters are not defined and every time these UFBU leaders have to beg the IBA, instead of asserting the constitutional guarantees provided in Bank Nationalisation Act.

When the banks are providing provisions on STANDARD ASSETS AS PER INTERNATIONAL STANDARDS, the wage revision of serving employees and pension issues of retirees are not dealt even at the level of REGIONAL STANDARDS OR LOCAL AREA STANDARDS, LEAVE ALONE ON NATIONAL STANDARDS.

02. The clause 12 of the MEMORANDUM OF SETTLEMENT dated the 29th October, 1993 between IBA and Officers' Associations and workmen Union says as under:

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Provisions will be made by a scheme, to be negotiated and settled between the parties to this Settlement by 31st December, 1993 for applicability, qualifying service, amounts of pension, payment of pension, commutation of pension, family pension, updating and other general conditions, etc. on the lines as are in force in Reserve Bank of India.

Originally, a provision is made in the settlement dated 29.10.1993 to update the pension among other things. This settlement is bilateral settlement, wherein, both the parties to the settlement HAVE equal say in the matters covered in the settlement. But unfortunately, IBA drafted Pension Regulations unilaterally and UFBU leaders were mute spectators. So what has been implemented out of settlement dated 29.10.1993, is only a part, other part has to be implemented. Now the time is ripe with pension funds position is strong and sound. As IBA wanted an affordable and viable proposition is available.

However, the argument is that our pension scheme is on the lines as are in force in RBI. Definitely, it is on the lines as are in force in RBI. The RBI has amended its Pension scheme with improvement in the areas such as

1. The rate of pension will be 50% of the average emoluments for the 10 months or the last pay drawn which-ever is more beneficial to employee

2. Minimum pension raised to Rs. 3500/- pm

3. Service of 20 years will qualify for full pension

4. Proportionate pension will be payable for less than 20 years of service.

5. Ordinary rate of family pension will be 30% of the pay uniformly plus DR subject to a minimum of Rs.3500 pm and maximum of Rs. 24495 pm i.e. 30% of Grade F's existing scale.

So according clause 12, what has been amended in RBI Pension scheme, has to be automatically to be amended in PS banks pension schemes, by issuing an administration circular by DFS Government of India, consultation with RBI and why these negotiations and discussions. Further it is to be noted that second option of pension was not given to RBI employees, but it was given to PS banks employees. So there can be improvement over RBI pension scheme and but not rigidity. No law comes as hindrance to improve the service conditions of employees, where there is strong and sound financial position of pension funds of employees.

Yours faithfully,

( S Ramachandran )
PENSIONER, SENIOR CITIZEN AGE 76 YEARS
AND FORMER GENERAL MANAGER, BANK OF BARODA

CC TO SHRI ARUN JAITLEY,
HON'BLE FINANCE MINISTER,
MINISTRY OF FINANCE,
GOVERNMENT OF INDIA,
NORTH BLOCK, RAISINA HILLS,
NEW DELHI-110001
FOR INFORMATION AND NECESSARY ACTION

CC TO CHIEF EXECUTIVE OFFICER,
INDIAN BANKS ASSOCIATION,
WORLD TRADE CENTRE, 6TH FLOOR,
CENTRAL BUILDING ,WORLD TRADE CENTRE COMPLEX ,
CUFFE PARADE,
MUMBAI 400005

C c. To SHRI NARENDRA MODI,HON'BLE PRIME MINISTER,
FOR INFORMATION AND NECESSARY ACTION.

CC To CMD Bank of Baroda Corporate Centre
Mumbai for necessary action.

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