Letter to Banking Division 27 12 2007

C N Venugopalan Ex-Manager, Union Bank of India	Nandanam Kesari Junction, N Parvoor, Kerala – 683 513
Phone. 0484 2447994 Mob: 9447747994 E-Mail: ceeyenvee@gmail.com

The Principal Secretary, 26^th December, 2007

Banking Division,

Ministry of Finance,

Govt. of India,

New Delhi – 110 001

Dear Sir,

Leaping in Darkness and Banking upon blunders

Through Gazette Notification dated 13^th July, 2002 Public Sector Banks in India amended Regulation 28 of the Pension Regulations as follows:

“Superannuation Pension shall be granted to an employee who has retired on his attaining the age of superannuation specified in the Service regulations or Settlements. Provided that, with effect from 1^st day of September, 2000, pension shall also be granted to an employee who opts to retire before attaining the age of superannuation , but after rendering service for a minimum period of 15 years in terms of any scheme that may be framed for such purpose by the Board with the approval of the Government.”

This was done at the behest of Indian Banks Association, the representative body of Indian bankers and the Government sanctioned the amendment blindly. Prior to the amendment also, banks were paying the superannuation pension to employees who retired prior to reaching the age of superannuation and with a service of 15 years, notwithstanding the fact that the Pension Regulations provided for payment of Pensions to those with a qualifying service of 20 years that too after attaining the age of 60 years. To ratify the erroneous and arbitrary payment the bankers made, the IBA mooted the amendment and the Government blindly approved it. It all amounted to creation of new law to cover up the misdeeds of the people who have power of the purse and authority. Prudent bankers know the need of legal backing for anything they do and still they disregard the laws of the land which form the premises of their existence.

The issue of granting second option on pension to bank employees, whom banks illegally and arbitrarily denied it while they amended the Pension Regulations in February, 1999 by deleting clause relating to “forfeiture of service for participation in strike” (on account of which, they did not join the Pension Scheme earlier when it was offered) is still pending in several High Courts across the country. This is a contingent liability that may increase the establishment expenses substantially. Without settling such old and important issues, IBA is in the process of mooting wage revision in the industry with substantial rise in Basic Pay and perks. A liberal wage hike will naturally increase the pension liability also to an unimaginable extent. Hence the earlier pending issue relating to second option on pension is to be considered in isolation first before thinking upon a wage revision in the industry.

The experts and luminaries in the banking field have, in the past committed many unscientific, arbitrary, illegal acts that axed the provisions of the Constitution of the democratic India, which resulted in the following anomalies:

1. Many a retired people who went out through VRS (remaining in the pension Segment) got salary and Pension concurrently for the left over service. They took up alternative assignments and are earning salary from other avenues.
2. Those who joined other banks after retiring from the parent institutions are drawing salary from the latter and Pension from the latter. In fact banking industry is paying them Salary and pension simultaneously.
3. The above category got the Pension which would otherwise be payable to them payable to them only after attaining the age of 60 got it much earlier.
4. The people who retired through VRS from the PF segment got deprived of the PF (employer’s share) that would have otherwise payable to them till the age of 60 from the date of retirement.
5. IBA has all along been signing separate wage pacts in respect of employees of SBI and employees of other banks, conferring distinct advantages to the former and the Government has been approving it blindly in spite of the fact that workmen from both segments were doing identical work. IBA and the government were discriminating identical people, thwarting the essence of the democratic nature of the Constitution of India.
6. IBA and Government have been instrumental in extending three retirement benefits ( Gratuity, PF and Pension) to SBI employees and only two retirement benefits ( Gratuity and Pension or PF) to other bank employees which is also a matter of utmost injustice and discrimination that has no parallel.

I hereby urge upon you to instruct the IBA to settle the issue of second option on Pension (on which a number of suits are pending in several High Courts) before considering any wage revision in the industry as otherwise, the prudent bankers would be committing further imprudent steps that will topple the budgets. There had already been two agitations, one on 27^th July, 2006 and 27^th October, 2006 over the issue and the agitation that was planned from 28^th March, 2007 has been stalled on an understanding that it would be settled before June, 2007. The matter is still pending and IBA may be asked to settle it before coming with any fresh wage pact without settling it.

Thanking You,

Yours faithfully,

C N Venugopalan

cc.to: Charirman, IBA, Mumbai