by

Sudhakar Rao,   (Ex VRS & Financial consultant)

[ Member India against Corruption Karnataka sudhakarraoiac@rediffmail.com ]

 AGENDA FOR Xth BPS  -- CRITICAL ANALYSIS

The Officers /Employees must have keenly seen the agenda submitted to IBA for 10^th BPS. I am not commenting on the nitty / gritty of the agenda item but on the macro issues which remained the focal point of wage negotiation during last -3- decades specially last 3 BPS i.e. 7^th 8^th & 9^th BPS.

1.    The wage negotiations were focused on the quantum of wage burden in %age terms, which the industry can afford to pay. It can 12.5%, 13.5% or 17.5%

2.    When the entire wage settlement is focused on %age wage rise, then submitting the detailed charter to IBA make no sense, rather it Is non sense to submit such detailed charter.

3.    The readers may react very badly to my such strong comment, but intelligent readers are requested to please seriously examine my observation which I am detailing further“ If the charter of demand submitted by the UFBU cause a burden/rise  of 35- 40% in the wage bill and we are going to get only 12.5% to 17.50% wage hike after 3-4 strikes of 1-2 days each  over a period of next -3- year ending 2015, then submission of such detailed charter becomes meaningless”. Readers to Critical comment.

4.    Once the quantum of % age wage burden hike is decided by GOI after few strike and invention of CLC, our respected militant UFBU Leaders will discuss the incremental cost of pension with IBA and meekly agree to share 50% of the burden and to that extent your revised wage will be reduced. Through this process the wages of employees, covered under NPS (which was effective from 01.04.2010) and the PF optees who have still not opted for pension, were reduced by 13% in last BPS.

5.    Once the incremental cost of the pension is agreed, our militant UFBU Leaders will distribute the remaining share of wage hike under various component of wage structure.  In the process they the employees retiring during 01.11.2012 till date of 10BPS,  will be denied the benefit of arrears of revised pension and revised commutation, as done in last -7 th 8^th 7 9- BPS. Even pension was reduced from 50% of basic pay  to 41% in 7^th BPS.

Under the above circumstances what Should be agenda for 10^th BPS

1.    Is it a collective bargaining or collective begging?

2.    Whether proper implementation of the last -3- BPS should not be the 1^st agenda item of the Trade unions.

3.    Exposing the biggest financial scam taken place in the Bank employees pension fund should not be the 1^st agenda item?.

4.    Whether rectifying the mistakes committed by the UFBU leadership in last -3- settlement should not be the 1st agenda item.

AGENDA I: Is it a collective begging or collective bargaining?

·         At the time of implementation of Pillai Committee Recommendations (PCR) in 1979 bank officers were recognized at par with Group A officers of Central Govt by GOI.

·         Group A officer is now placed in Scale 15400/- to Rs 39100/- with grade pay of Rs 5400/- to 8400/-pm. in 6^th pay commission. Therefore Group A officers is getting initial basic pay of 15600+5400=21000/- plus DA (72%) w.e.f 01.07.2012 & maximum BP of 39100/- +8400=47500/-plus DA (72%) He will reach at maximum in 32 years with annual increment ranging from 2.5% to 3.5%

·         My dear friends please analyze that your JMGS 1 is starting at 14500/- (14500/- to 25700/) against Rs 21000/- for Group A officer. This Group A officer is terminating at 47500/- in 32 years with assured progression scheme which your  officer will get if he at all becomes DGM in scale of  Rs 42000/--Rs 46800/- after -5 – promotions.

·         The Class two officer of Central Govt. is getting scale of Rs 8700/ to Rs 34800/- with grade pay ranging from Rs 4200/- to 5400/-.This is equal  to initial pay of Rs 12900/-(8700/-+4200=12900/) to Maximum of Rs 40200/- (34800/+5400/=40200/).      Our Scale III officer is getting max of 35100/- with -4- stagnation increments.    Our AGM is reaching at Rs 40400/- so our AGM is below class II Central govt. Officer and Senior Manager is equal to class III employee of Central Govt.

My dear employees and officers, do you want wage negotiation by militant UFBU with excellent negotiation skill which has lowered your status from Group A officer to below class II officer Of Central Govt. When your AGM is at par with Central Govt. Class II Officer, as negotiated in 9^th pay BPS.

AGENDA 2: Whether proper implementation of the last -3- BPS should not be the 1^st agenda item of the Trade unions.

·         When the wage negotiations are focused around %age increase in the existing wage, there after incremental cost of pension is reduced from the total %age wage rise, is it not the responsibility of the Unions to ensue that the  incremental cost of pension, so agreed, has been deposited in the pension fund.

·         Whether the Banks have deposited 10% p.m. as per pension regulations in the pension fund?.

• Whether agreed incremental cost of pension which was 16.5% p.m. as per 7 th BPS and shared equally @8.25% by employees and management has been deposited in the pension fund?.
• Whether agreed incremental cost of pension which was 18.5% p.m. as per -8th- BPS and shared equally @9.25% by employees and management has been deposited in the pension fund?.
• Whether agreed incremental cost of pension which was 26% as per -9th- BPS and shared equally @13%p.m. by employees and management, has been deposited in the pension fund?

·         Readers should note that SBI employees were paid 1.5% in 7thBPS, 3.5% in 8^th BPS & 6.5% in 9^th BPS as pension balancing cost over and above regular wage settlement.(See Mr Nadaf circulars), This amount  should have been deposited by PSBs every month in addition to 10% statutory obligation because UFBU has agreed for reduced wage to the extent of incremental cost..

• IBA never issued any guidelines to the Banks how much addition amount (%age wise) over and above 10% statutory should be deposited in the pension fund trust.

·   Whether the UFBU constituents who are also member trustee on Pension Fund Trust have ensured that the 10% statutory and incremental cost of pension as agreed in 7,8, 9 BPS  is being deposited in the pension fund trust?. Whether they done their duty?.

• Reader should note that Banks have not deposited even 10%p.m. statutory amount in pension fund.

Proof of not deposited even 10% in pension fund

(a)  SBI CMD transferred Rs 7927.41 crs from General reserve to Pension Fund  as on 31.03.2011. Central Statutory Auditors clearly certified that this amount arisen because inadequate funds were transferred in the previous years. Hence previous year balance sheet was falsified to this extent.

(b)  Bank of Baroda Chairman not deposited 10% statutory contribution every month as on 31.03.2010. See their annual report from the website. In fact he withdrew Rs 53 cr from pension fund to boost the profit to 3058/ crore in March 2010. The bank has deposited  Rs 472 crore during 2008-09 and 365 crore during 2007-08 but during 2009-10 employer contribution to pension fund is NIL .How the employer contribution can be Nil during 2009-10.

(c)  The list of PSB not deposited the statutory share in pension fund is very long which includes PSB, United Bank, UCO Bank, Central Bank Union Bank. Central Bank sponsored Common wealth game (Rs50cr) by employees pension fund  and showed their inability to deposit their 10% statutory due in pension fund.

(d)  It is diversion/loot of employees retirement funds to boost the profits and claim incentive of Rs 8 lacs from the Bank on the basis of falsified balance sheet. The amount involved is more than one lac crores which has been laundered  since 01.11.1997.

AGENDA 3: Exposing the biggest financial scam taken place in the Bank employees pension fund should not be the 1^st agenda item?.

(a).  SBI pension fraud  in the balance sheet- Note on Account no 8 & 9:

• As per Notes (No8) attached to the balance sheet “ consequent upon wage revision and proposed amendment to pension regulations, the pension liability for the year ended 31.03.2011 as determined by independent actuary amounted to Rs 11707 cr. The existing provision is only Rs 1306.70. The additional pension cost liabilities for previous years amounting to Rs 7927.41 cr has been charged to reserve in accordance with dispensation granted by RBI to banks letter no DBOD/BP/No16165/21.04.018/2010-11. The pension cost for the year amounting to Rs 2473 cr has been charged to the profit and loss account.”
• As per Notes (No9) attached to the balance sheet “ Rs 1965 cr has been charged to profit and loss due to enhancement in the gratuity ceiling, and wage revision

(b)    Bank of Baroda  The bank has deposited  Rs 472 crore during 2008-09 and 365   crore during 2007-08 but during 2009-10 employer contribution to pension fund is NIL .How the employer contribution can be Nil during 2009-10.

  (c )  Scam on bank employees pension fund in the name of Amortization of the  pension cost.

• RBI circular No DBOD.No.BP.BC:80/21.04.018/2010-11 dated 09.02.2011 permitted amortization of enhanced expenditure of pension liability on account of new pension option under 9^th BPS and amendment of Payment of Gratuity Act 1972 to banks, at the request of IBA vide guidelines on Prudential Regulatory Treatment.
• Accordingly -19- PSB  amortized Rs 19611.57 crore as on  March 2011. This amount of Rs 19611.57 will be deposited in -5- yearly installments  ending 2015 in the pension fund trust.
• When existing employees have deposited their 2.8 times of basic pay and retired employees have refunded 100% of provident fund and addition 56% cost in one installment, why the banks have not deposited  this 19611.57 cr in one installment.
• Is it not a loss to the pension fund?. The 9% average return on amortised pension cost of Rs 19611.57 will add to pension kitty by 1765.04 cr per year.
• When our Annual wage rise was  Rs. 4816 (Rs. 2239 crores for officers and Rs. 2,577 crores for award staff) w.e.f. 1-11-2007 agreed  as per 9^th BPS (CIRCULAR NO. 85 dated  29 / 11 / 2009 of AIBOC). Loss of interest of Rs 1765.04 cr  to pension fund is equal to 40% of wage rise offered in 9^th BPS.    Will you allow such crime/loot on your pension fund to continue?.
• Can RBI allow amortization of pension cost to boost the banks profit and falsify the balance sheet?.

• Can RBI allow Banks to amortize interest payable on FDR of customers and deny them the quarterly/ annual interest in the name of amortization and allow banks to boost their profit.?

• Can RBI allow amortization of depreciation to boost the profits?.  Is it not a fraud on the pension fund? Is it not a fraud on the balance sheet of banks?.

(d). The total pension scam in the Banking industry will exceed more than 1 lac crore if you take the SBI Rs 10400/cr plus  amortization 19611 cr plus 10% statutory not deposited plus incremental cost not deposited since 01.11.1997.

(e)      RBI in their Annual financial Inspection has repeated commented during Annual Financial inspection (AFI is yearly exercise) since March 2006 on Adequacy of staff related provisions: “The bank made provisions of 1012.09 crore (PY:630.62 crore) towards employee liabilities, including 365.98 crore being one fifth of liabilities towards new pension optees based on deficient demographic and economic assumptions. The actuarial assumptions of attrition rate of 2% or the return on funds at 8% were not based on actual observations. The fair value of fund had been arrived at without revaluing the entire investments of the fund. The actuarial assumptions of 2% escalation of basic salary and DA each, based on the inflation rate of 4% was out of sync with the actual inflation trend of above 8% throughout the year or 7.99% during 1969-2010.. The additional liabilities owing to above lacunae and funding thereof would have significant impact on the bank’s financials.    (Action-Critical). No Action taken and RBI closed its eyes

(f)     Will UFBU leadership rise to the occasion and expose these serious crime on your retirement funds and will join the common work force who is fighting the battle in the court against such injustice?.

AGENDA 4  Whether rectifying the mistakes committed by the UFBU leadership in last -3- settlement should not be the 1st agenda item.

Pension was offered in lieu of  CPF in 1993-95. It was on the line of Central Govt. and it was never contributory in nature. Any (BPS) settlement contrary to pension regulation which has parliamentary approval, is illegal in nature, will definitely be abrogated by hon’ble Supreme Court (number of cases already pending). It is a matter of time. The UFBU has illegally entered into settlement agreeing to bear the incremental cost of the pension since 7^th BPS i.e.01.11.1997. Hence

(a)  Refund 16.50% incremental cost of pension from 01.11.1997 to 31.10.2002, 18.50% from 01.11.2002 to 31.10.2007 & 26% from 01.11.2007 to 31.10.2012 because their wages have been reduced by this %age. See AIBOC circular no 64 of 12.05.2010.

(b)  The above amount was paid to SBI employees as pension balancing cost in each settlement. See AIBOC circular no 64 of 12.05.2010.

(C) Refund PF optees since 01.11.1997 because they were not beneficiary of pension. They have now already paid 2.8 times of Basic Pay as per actuarial valuation of 9^th BPS. PF optees should have been paid at par with SBI employees because they were not entitled to the pension prior to Oct 2009, the date of MOU, hence they deserve refund of the pension cost. 

        (d)  As per 9^th BPS, incremental cost of pension was worked out to be 26% and 13% was borne by the employees. The UFBU has agreed for reduced wages by 13% (see MOU & 9 BPS). How the employees joined after 01.04.2010 who are covered under New Pension Scheme, can be forced for wage cut due to pension burden when they are not the beneficiary of the pension fund trust. Are they not entitled to refund /payment of this forced wage reduction due to high pension cost propagated by IBA or payment of 6.5% which has been paid as pension balancing cost .

           (e)   The employees retired from 01.11.1997 till the date of settlement (7^th BPS), 01.11.2002 till the date of settlement(8^th BPS) & 01.11.2007 to 27.04.2010 (9^th BPS)  were denied the arrears of revised pension & revised commutation in the name of wage burden. Whether they should not be paid the arrears?

In view of the above submissions, readers are requested to critically examine the sanctity of submitting such detailed charter of demand which has no relativity with the final settlement signed by our militant UFBU leaders.

All the above are facts not the hyperbole but based on past experience during last -3- BPS. Mr Nadaf of AIBOC was honest enough to accept the above facts in his circular No 62 of 18.08.2009 & circular No 64 of 12.05.2010 (links are given for verification by readers). All data is based on the published results of the PSBs.

Mr Rajesh Goyal has already commented that Bank employees should forget a decent wage hike due to likely Titanic Default of Rs 10,000/- crores of  NPA of Kingfisher Airlines  (6500 cr) Deccan Group Rs 3500 crores. In fact -9- lacs bank employees should be ready to fork out Rs 1,11,000/-  to meet the titanic default of Rs  10000/- cr”

The amount may be higher if you add the fraud of Rs 3500 cr of Zoom Developers. Restructuring of more than Rs 2 lac crores as on 31.03.2012.

Whether Bank Employees are ready to forgo their pension/ salary in future because public money/ their retirement money is looted by powerful entrepreneurs by CDR, Write off, NPA provision, compromise settlement, Higher rate of interest to depositor above Rs one crore, who are bleeding the public sector Banks?.+

We feel that we are required to give a serious thought and demand a Pay Commission/Wage Board headed by Supreme Court Judge who may decide our wages looking to industry profile, comparable to Central Govt/ CPSUs and offer us  a fair and just wage revision. Should not we demand 6^th Pay commission for Bank employees?

Other suggestions/agenda points may be added by alert readers. Comments if any may be send to us on e-mail.

Following Three  Annexures are available just on Click for readers for proper understanding of the agenda.

Annexure 1 circular no.45 of 08.04.2010 of AIBOC expressing their limitation  on percentage rise of wage revision

Annexure 2 circular no.85 dated 29.11.2009 of AIBOC communicating the recovery of cost of pension from employees by reducing their wages by 23% of incremental cost of pension

      Annexure 3 circular no. on pension cost balancing and its payment to SBI employees