Plight Of PSU Bank Employees And Pensioners
Come 19 July, Indian banking industry will have a historical landmark. Bank nationalisation by former Prime Minister Indira Gandhi will hit half a century.
While a substantial section of government banking and finance machinery is inclined towards privatisation of banks, and merger of multiple banks into one, the employees are on the streets often for ameliorating their terms of employment, the most recent one being the 30-31 March two-day-long national strike for respectable wage revision (they have been offered 2% increment valid for the next five years).
The one million strong employees of all government banks, through their nine trade unions have decided to “celebrate” this day to protest against the growing signs and plans of privatisation of banks and for a higher wage revision and five-days-a-week work-schedule.
On 12 June, the United Forum of Bank Unions (UFBU), representing these one million bank employees met at Chennai to decide their next course of action after the national strike on 30-31 May, and this time the Forum intends to carry out a phase of public sensitisation on the issues at hand and also keep putting pressure on the Indian Bank Association (IBA) and Department of Financial Services (DFS), Government of India, apart from various political parties. The initial response of the IBA and DFS has been cold.
On 30-31 May, the nine trade unions of government bank employees, four being of officers and five of others, went on a two-day strike after rejecting the IBA proposal for a 2% wage-hike. The salary-structure of bank employees is fixed through a bipartite settlement, unlike Central and State government employees. After every five years, the salary is hiked to protect the employees against inflation.
The last settlement for the period of 2012-17 was of 15%, which did not match the then Sixth Pay Commission. But this time, with the increment for the period of 2017-2022, which came only a few weeks ago, seven months delayed, the employees expected a parity with the new Seventh Pay Commission of the Central government. But they were offered a 2% hike, on the plea of the low profitability of banks.
Twenty-one public sector banks have around 85,000 branches in the country, with a business share of about 70%. Industry chamber Assocham said that the bank strike in May affected customer transactions worth up to Rs 20,000 crore. It also urged the government to come up with a stimulus plan for restoring the health of PSU banks.
State-owned lenders are grappling with high levels of bad loans and as per reports their losses for the quarter ended March 2018 are set to hit a record Rs 50,000 crore, which is more than double the losses of Rs 19,000 crore in the preceding quarter ended December 2017.
The Chief Labour Commissioner (CLC) supported the issues and asked the IBA to respond positively. The CLC said that officers and employees had to be paid for their hard work and not on the basis of profit. The IBA representative said they would consider the revised offer, but requested the UFBU to quantify the demand. UFBU leaders quoted figures to prove how operating profits had doubled, staff expenses had reduced and business more than doubled.
The 2% wage hike will cost the banks an approximately Rs 500 crore, while the proposal given by the unions will cost around Rs 12,000 crore – which is surely open to negotiation.
The IBA and the Central government are linking the issue with profitability, but there has not been any hesitation to write off Rs 2.41 lakh crore in the last three years, and gross NPA (Non Performing Assets) stands at Rs 6.41 lakh crore today, according to RBI figures, which was around Rs 3 lakh crore in 2014.
For the last four years, banks have been earning operating gross annual profits ranging from Rs 1.3 lakh crore to Rs 1.6 lakh crore, but the net profit is being wiped out due to the bad loans, given not at the whims of employees and the faulty provisioning norms, but through political decisions.
There indeed should be parity, co-relation, uniformity and relativity of their salary with others in insurance and other sectors of the government. Further, the dissenting employees’ charter of demands has asked for a five-day working week and more facilities for women employees.
In an economy which clocks around 6% to 8% annual inflation, there is no justification of a 2% salary increment for all bankers as a constant for half a decade.
BANK PENSIONERS’ PLIGHT
There is also the issue of 5 lakh plus bank pensioners who are reeling under financial distress due to non-revision of their pensions ever since it was introduced way back on 1 January 1986.
The Bank Pension Scheme at the same rate, was formulated on the basis of the Central Government Pension Rules in 1993. As facts stand, Central Pension Rules underwent changes as per the Central Pay Commission Recommendations of 1996, 2006 and 2016. Bank employees’ wages and service conditions (barring pension) too were revised in 1987, 2002, 2007, 2012 and it has further become due, talks for which are going on.
Interestingly, bank pension payments do not have any bearing on banks’ expenses. Pension is paid out of income generated from pension funds, created and contributed to by bank employees and officers, while working.
These funds are managed by banks through trusts. The pension fund is invested in tax free bonds and government securities. The pension fund of the banks are generating a huge income and leaving huge surpluses after paying the pension. So, the pension fund itself is robust, but the bank management is just sitting on pension fund and is in a denial mode.