DENIAL OF JUSTICE BY PUBLIC SECTOR BANKS

ARTICLE PUBLISHED IN MATRUBHUMI NATIONAL DAILY IN MALAYALAM DATED 22.09.2017

DENIAL OF JUSTICE BY PUBLIC SECTOR BANKS

by

C N VENUGOPALAN Former Director State Bank of Travancore

Although government is to bear the salary in Public Sector Banks (PSBs) on account of government

ownership and nationalization, since such expenses are set off against the income of banks, government

has no expenditure on it.

Banks are permitted to declare a dividend and to retain surplus profits as reserves only after making due

provision for salary and superannuation benefits in terms of section 10 (7) of the Banking Companies

(Acquisition & Transfer of Undertakings) Act, 1970/1980. But when the government is taking the

dividends without paying adequate salary and pension in banks and apply the same for paying higher

salary and pension to other government employees, the bank employees get exploited.

When banks had a higher pay than the government pay during 1970s, the salary in banks was regulated by

implementing Pillai Committee Recommendations to regulate pay in banks to bring about parity.

Afterwards, government pay became higher by Rs.30,000/- to Rs.40,000/-a month than bank pay, ignoring

the parity . Eligible pay was denied to those who work for six days a week and for extended hours each

day. Notwithstanding the fact that pension scheme in bank was exactly on all fours with the central civil

pension as per pension rules, as pension is never revised with revision of pay, bank pensioners are much

forced to the walls. A General Manager who retired 15 years bank from the bank gets a lower pension

than that is payable to his Clerk retiring now.

Even as the annual accretion in Pension Fund of all PSBs can foot two to four times the present pension to

all pensioners, Basic Pension has never been revised ever since the inception of Pension Scheme. Pension

Funds had been constituted with the contributions which banks were to make to EPF previously, Pension

Funds is the deferred wages of employees. It is not banks' money. As pension is payable out of such

Pension Funds, the payment never affects the profits of banks. Government also does not have any

expenditure to revise the pension.

When Pension Scheme was commissioned in banks, there was a penal clause providing for forfeiture of

past service in case of participation in any strike which prevented employees from joining it. Later,

Pension Regulations was amended in 1998 by deleting the rigorous clause, banks did not allow a fresh

chance of option to employees, contrary to government direction to give effect to the amendment. The

amendment got confined to mere amendment with no purpose.

After a long gap, Indian Banks' Association and Bank Unions agreed to give a fresh option for pension in

April, 2010. But when rules mandates payment of pension from the date of retirement, the testament of

27.04.2010 provided for its payment from 27.11.2009 to those who retired prior to its date. This apart,

option and pension was allowed subject to a contribution to the tune of 2.8 times revised pay for

November, 2007 in case of employees on rolls and 56 percent of CPF paid on retirement in addition to

refund of CPF in the case of retired employees to the Pension Funds of Banks. Notwithstanding the fact

that pension, the benefit in lieu of CPF would flow from the date of retirement when the CPF and 56

percent of it, presumably by way of interest, is paid back, it was denied for varying periods to

27.11.2009 to employees retired on various dates. The amounts which were collected from employees

and retired employees are that which banks were to contribute

deficiency. Regulations do not warrant a contribution by the employee other than his initial transfer of

CPF for joining the Pension Scheme.

It was in derogation of the Pension Rules laid down by the Indian Parliament that the Government permitted PSBs

to implement the agreement dated 27.04.2010 in banks. For amending a regulation, it is essential that the

amendment shall be laid in both the Houses of the Parliament for a period of 30 days, as soon as it is framed. It is

on the basis of the agreement which is not so far laid in the Houses of the Parliament in spite of the passage of

seven years that PSBs levied the unlawful contributions and denied pension till 27.11.2009 to retired employees.

The government is bound to roll back the agreement of 27.04.2010 as it has no powers to implement it in conflict

with the rules in force. It is the responsibility of the government to render justice to the retired bankers who

sacrificed their entire life span for nation building by translating all its financial policies into a reality.