Letter to Economic Times

C N Venugopalan Ex- Manager, Union Bank of India & Financial Consultant (Voluntarily Retired)	“ Nandanam” Kesari Junction North Paravoor Kerala – 683 513
Phone No. 0484 2447994 Mobile: 9447747994

The Editor, 11^th July, 2006

Economic Times,

Kochi

Proposed Strike of Bank Staff

The Trade Unions in banking industry are planning an agitation on 1^st August. 2006 to press their demands i. e. regarding outsourcing of bank jobs, compassionate appointment and 2^nd option on Pension. The principal agenda is securing a 2^nd option on Pension in banks other than State Bank of India, which has become the cardinal issue with the hike in Pension granted in SBI as a third retirement benefit. Though all bank staff are doing the same work, SBI employees are given three retirement benefits viz. Provident Fund, Gratuity and Pension whereas others are getting two benefits only i.e. Gratuity and Provident Fund or Pension. Indian Banks Association, the representative body of banks who settles wage related issues with bank unions have, all along, adopted a partisan attitude conferring distinct benefits to State Bank of India staff alone by reaching separate wage agreements for them. Many employees in banks did not join the Pension Scheme in 1995 within the time frame for option since the Pension Regulations contained a penal clause enabling managements to forfeit past services of an employee for participation in strike even for a single day. As Pension Scheme entailed surrender of the CPF of employees to Pension Fund, if the managements forfeited the past services of an employee any time, he would lose his CPF as also Pension as a minimum qualifying service of twenty years was needed to become eligible to Pension. The forfeiture of service for participation in strike clause was scrapped from Pension Regulations in February, 1999. The managements then had an onus to grant fresh option to employees when the forfeiture of service clause was removed from Pension Regulations. They however kept the information out of the reach of the employees without issuing appropriate circulars, but merely published it in the Gazette of India contrary to the practice they followed while amending any Regulation. Bank managements are refusing to extend fresh chance of option to the employees of other Banks, including associate banks of SBI. In RBI however, a fresh option for Pension was given in the year 2000.

While employees’ Unions like BEFI and Officers’ Associations like AIBOC are pressing the issue of Pension, some distorted unions are making an attempt to sidetrack the main issue and projecting outsourcing and compassionate appointments as the principal items of discussions. They oppose outsourcing on grounds of secrecy of bank transactions. Secrecy is an old and irrelevant concept since transparency is the order of the day and need of the hour. Moreover, Right to Information Act, 2005 has scrapped the concept of secrecy altogether. Unions with vested interest demand secrecy as essential ingredient only to hide corrupt deals from reaching knowledge of the public. Compassionate appointment is a small issue since the cases involved are very less. The issue of 2^nd Pension Option is the vital issue affecting about five to six lakhs of employees and is to be granted expeditiously from legal and social angles. Failure to do so will tantamount to contempt of Court too since the constitution bench of the Apex Court has made observation that right to pension is an inalienable one and not a charity doled out to retired employees, depending upon the sweet will of the employer. Bank Managements are also well aware of it but are paying scant attention to the Court verdict.

The cost aspect of 2^nd option of Pension will not at all be felt by the banks or the state since Pension Scheme as a second retirement is one which replaces the CPF scheme. The Pension Corpus will get augmented by Rs.4 lakhs to Rs.5 lakhs with each employee joining the Pension Scheme. Banks had a liability to contribute to the CPF in respect of each employee on its rolls as of 1995 (the year in which Pension Scheme was commissioned) till the time of their retirement. The amounts so payable in respect of each employee was a committed cost as of 1995 and ought to have worked out notionally and transferred to Pension Fund to augment it in the subsequent period also. But after transfer of the CPF balance of all who joined the Pension Scheme in 1995 to the Corpus, they stopped such contributions in respect of such employees and created a backlog of about ten years. The amounts payable as establishment expenses went to inflate profits unduly. The working results banks published every year failed to reflect a true and fair picture of the financial of the banking company concerned. Fund constraint to meet Pension obligation is a lame extenuation since all banks are showing good working results even after they drain out the vital fluid of banking system in several crores of Rupees indulging in competition by reducing the lending rates extended to big borrowers with bargaining powers. If at all banks cite fund constraints as a reason, they have to explain what they would have done if every body had opted for the pension in 1995. Besides, the Scheme which was commissioned in 1995 encompassed all those who retired from Banks from 01 01 1986. This gesture was to accommodate a single man who was a trade union leader who retired some time in 1986.

Yet another absurdity of the scheme is that the fresh employees recruited after 1995 are compulsorily extended pension benefit without any sacrifice or contribution from their side whereas the banks are not allowing existing employees to join the scheme even against surrender of their CPF contribution amounting to Rs.4.00 lakhs to Rs.5.00 lakhs. In the process, banks altogether ignore those who made them what they are now and make a provision for those who are yet to join the banks.

While Banks implemented a Voluntary Retirement Scheme in 2001, they granted Pension which would normally have accrued on attaining the age of 60 to the retirees in Pension Segment from the ensuing month of retirement say, from 50^th year or so. In the case of CPF optees, they did not pay them the CPF amount till the date of normal retirement.

The discrimination Indian Banks Association and member banks meted out to employees doing the same job, either deliberately or inadvertently, is becoming the cause of a countrywide agitation that may put the banking operations in the country to ransom. Whereas Pension has been allowed in SBI as a third retirement benefit, it has to be given in other banks also so as to do away with violation of fundamental rights enshrined in the constitution. As a responsible body of the bankers in India, IBA has to correct the past mistakes it committed and ensure uninterrupted banking services without driving the employees to the path of agitation. This is all the more necessary when an agitation of all the bank employees is in the anvil especially in the context of the untold sufferings that the business community and general public suffered in April, 2006 when a fragment of employees in a single bank viz. SBI agitated for about a week. As a responsible body, IBA owe clarification of its stand if it has commitments to the customers and the public.

Yours faithfully,

C N Venugopalan