Indian Banking Sector: A saga of labour unrest
C N Venugopal
(Story on Pension Option published in Business Economics 2006 December 16-31 Issue. The fortnightly is published simultaneously from Delhi and Kolkatta and distributed by India Book House, Mumbai. The columnists of the Fortnightly comprise Dr. P A Sangma, M P, Mr. Sitaram Yechuri, M P. , Mrs. Maneka Gandhi M P, Dr. Subramania Swamy, M P, Yewswanth Sinha M P etc. )
The banking sector in India is characterized by labour unrest. Agitations and strikes have become a common phenomenon. Absurd policies of bank managements and their organization Indian Banks Association (IBA) have sown the seeds of discontent among the workforce, resulting in frequent paralysis of the banking operations.. The future of about eight lakhs bank men and their families is in dark as they are denied the pension benefit, the only means of livelihood, on cessation of employment.
April, 2006 witnessed an eight day long strike in the banking major State Bank of India (SBI), with the strikers pressing for hike in Pension and claiming parity with the Pension Scheme in other banks.
While commissioning the Pension Scheme in 1995, the authorities had created two separate classes of employees with entirely different pay packets among people doing the same work in the rest of the banks including the subsidiaries of SBI. A section of employees opted for the Pension Scheme within the stipulated date. Others continued in the contributory provident fund (CPF) Scheme since their joining the Pension Scheme entailed surrender of CPF contribution to Pension Fund and banks reserving a right to forfeit the entire past services of the employee for participation even in a day’s strike. While Pension was not uniformly available to all employees in other banks, Government sanctioned hike in Pension to SBI employees in the name of bringing about parity with something illusory. Approval of the demand of SBI staff created a new class with three retirement benefits. i.e. Gratuity, Pension and CPF while the counterparts in rest of the banks could avail CPF or Pension besides, Gratuity.
During the earlier period, IBA, the body of bankers that negotiates compensation packages of bank men with unions signed separate agreement in respect of SBI and the rest of the banks conferring distinct advantages to the former and thus widening the discrimination. The Government finally approves the wage revision and usually assents to the unscientific proposals that IBA submits sans any intelligent reckoning.
| Refusing to extend fresh pension option to employees, in spite of the legal obligation on varying the terms of the original offer, banks are driving the work force out of their seats |
Bank Trade Unions made a clamor for scrapping the clause on forfeiture of past services for participation in strike on ground of thwarting trade union rights. Though they got it deleted in February, 1999, they filed to secure the fresh pension option for those who did not opt for it when the deleted clause existed in the Regulations. The benefit of the amendment thus became minimal. Contrary to the regular practice of circulating amendments in English and Hindi for information of the employees before giving effect to it through Gazette Notification, banks confined the amendment to the Gazette of India alone. This kept the employees in dark about the developments. Refusing to extend fresh pension option to employees, in spite of the legal obligation on varying the terms of the original offer, banks are driving the work force out of their seats
Refusing to extend chance for fresh Pension Option in its original form to employees, in spite of the legal obligation on varying the terms of original offer Banks are driving the work force out of their seats. Bank offices remained closed all over the country on 27th October, 2006 when staff struck work in furtherance of Pension Option. The strike of bank unions under the umbrella of United Forum of Bank Unions is the genesis of the Banks and the Government that are not showing wisdom and preparedness to correct the mistakes.
The life of about eight lakhs lakhs bank men who are still in the PF stream is in the dark for want of Pension, a social security benefit they need for making both ends meet on their retirement. Pension is a consideration for the relentless service the employee has put in. . The option was exercised in an entirely different scenario which was varied subsequently. Authorities need to consider this fact.
Paucity of funds to meet Pension obligation is an illusion and a mere extenuation. Pension expenditure can be met with the committed costs to banks obtained at the time of commissioning the Pension Scheme in 1995.
Banks had a liability to contribute CPF in respect of all employees on the rolls as also the future employees who are compulsorily encompassed by Pension. After transfer of the CPF to Pension Corpus of all the employees who joined the Pension Scheme, banks did not transfer any further amounts to the pension Fund. In respect of fresh recruits also, banks did not transfer to Pension Corpus, the amount they were liable to contribute as CPF, if the PF Scheme was to continue. A back log of eleven years is created already.
| Parliamentarians draw a pension despite subsequent ouster from office on public disapproval, one finds no reason how a bank man who serves his full life time for the institution can be denied his Pension
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While extending fresh option, the existing CPF of all the entrants in the range of Rs.4 to Rs.6 lakhs would supplement the Pension Corpus. The augmentation in respect of about 8 lakhs employees would come to Rs.50, 000 Crores. Backlog and future contribution in respect of those who earlier joined the scheme, the CPF transfer and future contribution of new entrants through fresh option and the notional CPF of fresh recruits taken will add to the Corpus a minimum sum of Rs. One lakh Crore. Judicious investment of the corpus would generate surplus money for meeting Pension obligation as all are not going to retire in a lot after getting fresh option. But ironically, government and banks are reluctant to approve the demand.
Banks these days show fantastic profits and it is strange that they have no money to meet pension provision, a legitimate claim akin to fundamental right of an employee. Without any commitment to their own people, how can banks have commitment to the society? In a country where peoples’ representatives who sit for a term in Assembly or Parliament draws a pension despite subsequent ouster on public disapproval, one finds no reason how a bank man who serves his full life time for the institution can be denied his Pension.
“Voluntary Retirement” Scheme
The so called “Voluntray Retirement” Scheme banks formulated was an abetted one through incentives offered. Banks paid salary and Pension concurrently for the left over service to those who retired at about 55 years of age. It was a gross absurdity that had no precedence.. Pension that normally accrued on attaining the age of 60 was paid to retirees in Pension segment from the ensuing month of retirement. The PF contribution that was to be paid to PF segment employees for the left over service was discontinued on their exit, making the PF segment gullible.
While offering Voluntary Retirement Scheme, some Banks initially stated that Pension Benefit as per Pension Rules would be paid to Pension segment staff. At the fag end of closure of the scheme, they amended it saying that grace period of 5 years would not be added to total service. The chance for revoking the VRS subscription was not extended to them on varying the terms. This resulted in a huge influx of petitions in different Courts that are strangled already and suffocating. Pension being a consideration for rendering minimum stipulated service, the modus of exits viz. Voluntary Retirement, Normal Retirement etc. become immaterial and denial of the grace period to Voluntarily Retired is irrational and needs to be reviewed.
Banks are at present formulating and offering new packages like Exit Option. A fresh Pension Option may induce some existing employees to quit employment without any special incentive or compensation package. Banks can save Rs.10 lakhs to Rs.15 lakhs payable instantly as compensation for no work done.
It is high time that the Banks and the Government give a second thought and review various actions to avert labour unrest.
- C N Venugopalan, “Nandanam”, Kesari Junction,
- North Paravoor, Kochi, Kerala 683 513 Phone 0484 2447 994
- Mob: 9447747994
The Author is a retired manager of Union Bank of India and can be contacted at cnvenu@ yahoo.com
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