Business Line:
AIBEA wants clarity on ‘transfer’ of ₹2,026 cr from PNB Pension Fund
Updated: July 3, 2017 22:24 IST | Vinson Kurian
CH Venkatachalam, General Secretary, AIBEA
Transfer effected to enable the bank show artificial profit, alleges General Secretary CH Venkatachalam
All
India Bank Employees’ Association (AIBEA) has written to the Centre
seeking clarifications over the reported transfer of ₹2,026 crore from
Punjab National Bank (PNB) Employees Pension Fund to the bank’s profit
and loss account.
“We
are receiving anxious queries from bank employees and retirees about
the fund transfer effected to allegedly enable the bank show artificial
profit,” CH Venkatachalam, General Secretary, AIBEA, wrote to the
Secretary, Financial Services.
The
letter quoted from item 5 of the auditor’s independent report which
mentioned that: “...we draw attention to Note 6 regarding change in
valuation of plan assets of long-term benefits from book value to fair
value, resulting in increase in the value of plan value assets by
₹388.07 crore in respect of pension fund and by ₹53.08 crore in gratuity
fund.”
Clause
11 of the balance sheet of March 31, 2017 said that: “In accordance
with the AS-15, during the current quarter, while considering the fair
value of plan assets relating to pension and gratuity fund being
long-term assets benefits of employees, interest accrued on investments
has also been taken into account as against principal amount in earlier
quarters/years.”
Consequent
to this, employer contribution to pension and gratuity funds
representing excess of fair value of plan assets over present value
obligation amounting to ₹2,026 crore has been credited to ‘Payments to
and provisions for employee cost during the current quarter/year.’
“From
the above and allied information, we learn that the employee cost has
become negative in the last quarter of 2016-17 and the total employee
cost for the year has also come down,” Venkatachalam said in the letter.
Read
along with information that ₹2,026 crore has been credited to employee
cost due to excess value in pension fund, it means that the amount has
been taken from the pension fund to the employee cost account in the
P&L account.
Since
the accounting procedure was changed as on March 31, 2016, from book
value to fair value, it is not clear as to why this was not adhered to
in Q1, Q2 and Q3 of 2016-17 and implemented only in Q4.
The
government has not appointed a Workman Employee Director in banks; so
there is no scope to know what transpired while finalising the balance
sheet.
“However,
a nominee director of the Finance Ministry serves on the board of
banks, including PNB. Hence the government should be aware of the
factual position,” Venkatachalam said.
Regards,
E.R.Iyer
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