Advice of RBI is Binding on Banks and government

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Only Advice of RBI Is Binding on Banks and Government - IBA does not have powers to interpret and directly advice to Banks on matters of pension etc.

Place : Udupi

Date : 02/11/2011

The General Manager

Reserve Bank of India

DBOD, Central Office, Regd AD

12TH Floor, Central Office Building

Shahid Bhagat Singh Marg Email: CGMICDBODCO@RBI.ORG.IN

Mumbai - 400 001.

Dear Sir,

Sub : Statutory consultation with RBI by nationalised banks in terms of section 19 of Banking companies(Acquisition and transfer undertakings) Act 1970/1980.

I. Earlier I have complained to AGM and DGM, DBOD. The replies received from AGM were evasive. Replies from DGM are yet to be received. In view of the same I am constrained to approach you in public interest as law of the land is flouted blatantly and unhesitatingly by responsible entities.

II. Ever since the Central Govt. took over the responsibility of dealing with industrial Disputes in the banking companies by enacting Industiral Disputes (Banking & Insurance companies) Act 1949 and constitution of Tribunals there under, conditions of service for the clerical and subordinate staff of Banks are governed by conciliatory negotiations called Bipartite settlement held periodically between nationalised Banks in the year 1969.

III. Till nationalisation of Banks, officers were governed by different service conditions in different banks. They were neither governed by Industrial Disputes Act 1947 nor by Industrial Disputes (Banking and Insurance Companies) Act 1949.Settlements arrived at were applicable to clerical and subordinate staff only and were simply required to be got recorded under I D Act 1947 and the changes in the conditions of service applicable to clerical and subordinate staff become final. However after nationalisation service conditions of Bank officers were brought within the purview of provisions under section 19 of Banking companies (Acquisition and Transfer of undertakings) Act 1970/1980. The provisions of section 19 of the said enactment are reproduced here below.

Quote "19(1) [1]Power to make regulations:[1] The Board of Directors of a corresponding new Bank may after consultation with Reserve Bank and with the previous sanction of the Central Government by Notification in official Gazette make regulations not inconsistent with the provisions of this Act or any scheme made there under to provide for all matters for which provision is expedient for the purpose of giving effect to the provisions of this Act. (2). In particular and without prejuidice to the generality of the foregoing power the regulations may provide for all or any of the following matters, namely the establishment and maintenance of superannuation, pension, provident or other funds for the benefits of officers or other employees of the corresponding new bank or of the dependants of such officers or other employees and the granting of superannuation allowances, annuties and pensions payable out of such funds" Unquote.

IV) To eliminate the problems of disparities and to bring uniformity in the service conditions of officers of various nationalised banks, Central Govt. got notified by all nationalised banks in the Gazette of India, the service conditions for officers in accordance with the statutory requirement of section 19 (1) read with subsection 2(f) of Banking companies (Acquisition and Transfer of undertakings) Act 1970/1980. Thus the Bank officers Service Regulations 1979 is a piece of subordinate legislation. Under this subordinatelegislation, rules can be framed by the Board of Directors of individual banks to give effect to changes in service conditions of officers category. It is to be remembered that copy of Bank officers services Regulations 1979/1980 were placed on the table of Parliament by each bank in compliance of law.

V) However since the Bank (Employees) Pension scheme evolved in the year 1995 is governed by an independent Pension regulations any changes in the said regulations can be adopted and implemented in terms of section 19 (1) read with sub section 2 (f) of Banking companies (Acquisition and Transfer of undertakings) Act 1970/1980 only.

Either under section 19 of Banking companies (Acquisition & Transfer of undertakings) Act) 1970/1980 or under Bank officers service regulations, there is any place for Trade unions and Indian Banks Associations for suggesting any changes in service conditions of officers. They are part of private arrangement evolved over a period to hold only negotiations but advice on record as far as officers are concerned shall be in accordance with the provisions of section 19 (1) read with sub section 2 (f) of Banking companies (Acquisition and Transfer of undertakings) Act 1970/1980. This means the advice of RBI alone is binding on banks and Govt.

VI) ̠The Banks have by authorising IBA, a private unregistered association without consulting Reserve Bank of India a statutory and regulatory authority arrived at some understanding on 27/04/2010 with Trade unions through a joint note vide its clause 3 (a) to give one more options to all officers who were in service of the Bank prior to 29/09/1995 in case of Nationalised banks/26/03/1996 in case of associate banks of State Bank of India and retired after that date but prior to 27/04/2010. Joint note is only a guide to make appropriate changes in the pension regulations and it cannot override the statutory provisions of section 19 (1) read with sub section 2 (f) of Banking companies (Acquisition and Transfer of undertakings Act) 1970/1980. Of course, the clause No. 10 of joint note dated 27/04/2010 specifically cast upon IBA a duty to act in terms of section 19 of Banking companies (Acquisition & Transfer of undertakings) Act 1970/1980 by complying with the procedures for amendment for relevent pension regulations. IBA has failed in its duty. Joint note does not specifically authorise any banks to disburse pension to new group of retirees before getting the pension regulations amended/notified in the official Gazettee.

VII) All public sector banks, on the mere advice of IBA dated 10/08/2010 and without consulting RBI and without seeing for themselves the sanction of Govt. of India and wrongly interpreting certain clauses of Joint note dated 27/04/2010 implemented the changes suggested in the joint note and disbursed pension to new group of retirees/Voluntary retirees. Consultation envisaged under section 19 (1) and 19 (2) (f) of Banking companies (Acquisition and Transfer of undertakings is not an empty formality. Such Consultation shall precede the implementation and not vice versa. It is also a fact that without providing to the eligible retirees duly notified copies of amendments made to the pension regulations, fresh options are called for and their signatures are obtained on dotted lines by giving short notice. They are stil unaware of the changes likely to be made in the pension reguations. This is nothing short of coercion. This is illegal.

VIII) RBI is held in high esteem in this country by public at large. Now there is a public opinion that had RBI, the statutory authority was consulted before implementation there would not have been any chance for heart burning among thousands of voluntary retirees who alone have been denied another option to join pension scheme. It is true that there is no provision in the Act which enable RBI to interfere in the service conditions matter of Bank Officers. But when a specific complaint is received in public interest, RBI too has an obligation to look into the same. I also feel that at some point of time, the statutory entities shall intervene suo-motto in public interest and assert their authority. It is always in the interest of the country to avoid interference of non-statutory entities in the decision making process of statutory entities. Banks have commernced disbursement of pension from 01/01/2011 itself to new group of retirees/voluntary retirees but RBI DBOD has vide its letter No. DBOD.CO.RIA 14958/04.03.003/2010-11 dated 23/03/2011 confirmed that DBOD has not issued any communication to Public Sector Banks to finally adopt resolution by their Board of Directors to extend another option for pension to all the non-optees who were in the services of the Banks prior to 29/09/95 and continued to be in the services on or after the said date and id not opt for pension earlier. In the said letter dated 27/03/2011 RBI, DBOD has categorically declared that in terms of section 19 (1) (2) (f) of Banking companies (Acquisition and Transfer of undertakings) Act 1970 and 1980, the Board of Directors of Public sector banks may make regulations with regard to pension for the benefit of the employees after consultation with Reserve Bank of India and with the previous sanction of Central Government. This also shows that Govt. sanction alone is not sufficient. Without consultation of RBI and getting the amendments notified, banks have disbused pension. There is no provision under section 19 of Banking companies (Acquisition & Transfer of undertakings) Act for post implementation consultation. In the said letter, RBI DBOD has informed that it has not delegated their power vested under subsection (2) of section 12 of Banking companies (Acquisition and Transfer of undertakings) Act 1970 on service matters relating to the offices of Public Sector Banks to Indian Banks Association, a private association of all banks both in private sector and public sector.

IX) I have under my letter dated 14/10/2011 and letter dated 21/10/2011 provided DGM, RBI DBOD with a copy of IBA ketter No.PD/CIR/76/G2/394/dated 01/06/2000 and letter No. CDL:1486/2010 dated 24/12/2010 of Vijaya Bank. In the letter of IBA, it has agreed with the observation of Supreme court of India that there is no difference between those voluntarily retired and those who ordinarily retired. In the letter of Vijaya Bank, it has confirmed that load component of Rs. 351 crores furnished to actuaries on behalf of their bank included the officers/retirees who retired under the then existing VRS scheme of the Bank. I Hope that these two documents will be taken into consideration by you during the process of consultation by banks under section 19 of Banking Companies (Acquisition and Transfer of undertakings) Act 1970/1980. In view of clause No. 10 of Joint note dated 27/04/2010, IBA itself may claim right to hold statutory consultation with RBI on behalf of all banks which is not envisaged under section 19 My first request is to disallow IBA, a private association, for holding consultaion process with RBI on the pretext that they are authorised to do so vide clause No.10 of Joint note. My second request at this stage is to enquire from all Public sector Banks as to why they have not forwarded to RBI their proposal offering one more option for pension to officers of Banks for consultation before implementation of Joint note dated 27/04/2010. Third request is to render an uniform advice to all banks so as to make any amendments stand the test of scrutiny by High courts and Supreme court of India.

X) Finally as a citizen of India I have an obligation to assist the statutory authorities in public interest by providing necessary inputs for thier consideration. Therefore I have placed before you the above facts as I wish to exaust all soft options first.

Thanking you,

Yours faithfully,

Shri A. Premanand Pai

"ANJANA" Ist Cross

5th Main Road

V.P.Nagar

Udupi - 576 102

Karnataka.

Mobile No. 94490 49041.

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