Ex-servicemen To Finance Minister

Under Secretary (Welfare)
Ministry Of Finance
Department of Financial services (welfare)
Govt. of India
New Delhi.

Letter No. PER/ 01/2014 14 June 2014

Dear Sir,

Subject: Discrimination of pay fixation of Ex Servicemen - Re-employed in PSU banks

Reference is made to your office letter No. File No. 4/3/2012-SCT (B) /Welfare letter dated 30 December 2013, addressed to the Chairman of Indian Banks Association (IBA) and also the new guidelines issued by IBA for fixation of pay of Ex-servicemen (ESM) re- employed in Public Sector Banks (PSBs) after 01.01.2006.

2. It is observed that the IBA has not only misinterpreted and violated the established Government policies and existing guidelines issued by different departments of Government of India, but also violated instructions issued by your office vide the ibid letter. I am listing certain points for your kind consideration and urge your good office to review your consent given to IBA as IBA has instructed the banks to implement the new guidelines and also to review the pay fixation already done in case of Ex Servicemen re-employed PSU Banks. 

 a) Pay fixation of Ex Servicemen is a privilege extended only to Personnel Below Officer Rank (PBORs) re-employed in Group ‘C’ and ‘D’ posts in PSUs. The subject matter is governed by Govt of India, Min of PP&G (Dept of personnel and Trg) OM No. 2/1/86/Est Pt – II dated 31 Jul 1986. Department Personnel and Trg O.M. No. 3/19/2009-Estt (Pay II) dated 05 April, 2010 was issued to clarify and amend few aspects mentioned in the earlier O.M. No.3/1/85-Estt (Pay II) dated 31 July, 1986 wherein the basic pay in the revised pay structure is mentioned as pay in the pay band plus grade pay attached to the post. The original O.M. No.3/1/85-Estt (Pay II) dated 31 July, 1986, clearly states that last drawn pay of ESM is a combination of many components of pay including Basic Pay, Pay (including deferred pay), Good Service/Good Conduct pay, Air Proficiency pay, Badge pay, War Service increments Classification pay and Deferred pay. The Sixth Central Pay Commission has revised the Basic pay structure of PBORs in Defence Forces as a combination of Pay in band, Grade pay, Military Service Pay, X Group pay, Good Conduct Badge pay and Classification pay. 

 b) The total pay in the revised pay structure as per VI CPC should be considered as pay in the pay band plus the grade pay attached to it along with MSP, X Pay, GCB pay, Classification Pay if any for Personnel below Officer Ranks (PBORs). For Officers, the Pay is pay in Pay Band plus Grade Pay attached to the post along with MSP and Non Practicing Allowance, if any. IBA in its letter has presumed that once these components are not mentioned in the definition of pre retirement pay they need not be protected. This contradicts the earlier procedure of re fixation of pay followed in PSBs. Earlier along with Pay (including deferred pay), Good Service Conduct Pay, Badge Pay, Classification Pay, Qualification Pay formed pre retirement pay. In the revised pay structure the concept of Basic Pay was replaced by running pay bands along with the introduction of grade pay. Rest of the components like classification pay, Badge Pay continued to be paid along with the introduction of new components like X Pay and MSP.

 c) Regarding Military Service Pay (MSP): As per THE GAZETTE OF INDIA : EXTRAORDINARY , MINISTRY OF DEFENCE, RESOLUTION, New Delhi, dated 30th August, 2008 ( page 22) clearly states “the MSP shall count as pay for all purposes except for counting annual increments”. 

d) Regarding X Group Pay (X Pay) : (Vide Service Instructions - (a) For Service Officers : SAI-2/S/2008, SNI – 2/S/2008, SAFI -2/S/2008 (b) For PBOR : SAI – 1/S/2008, SNI – 1/S/2008, SAFI – 1/S/2008). For reference as per SPECIAL AIR FORCE INSTRUCTIONS No. 1/s/2008 dated 27th October 2008 (Corrigendum) states that for X Pay as – “ It will be counted as Pay for all purposes including for calculation of annual increments”.

e) IBA in its annexure quotes MoD letter No. 1/69/2008/D (Pay/Service) dated 24th July, 2009 for the purpose of definition of pre retirement pay. It says pre retirement pay for those who retired on or after 01.01.2006 means the pay in the pay band plus grade pay but inclusive of Non-Practicing Allowance (NPA) if any, last drawn before retirement. This definition relates to officers pay component like NPA (Accorded to Medical Officers) but ignores the pay components like X Pay, Classification Pay and Good Conduct Badge Pay etc. accorded to the Personnel Below Officer Ranks (PBORs). Hence in its letter IBA excludes all other components of pay like classification pay, GCB, MSP and X Pay from re fixation on the pretext of not being mentioned in the definition of pre retirement pay as per MoD letter No. 1/69/2008/D(Pat/Service) dated 24th July, 2009. The components like Classification Pay and GCB were being protected since years and discontinuing it in ambiguous pretext is illogical.

 f) IBA through its letter dated 16.03.1992 reckons Special Allowance for fixation of Pay during re-employment in the bank on the grounds that Special Allowance is accorded for DA and is considered for calculation of pension benefits in the Banks. The same criteria should be applicable to all the other pre retirement Pay Components also. Military Service Pay, X Group Pay, as well as GCB pay and Classification pay are vital components of pay structure that was introduced to maintain categorical difference among the personnel of defence forces by the Sixth CPC. Dearness Allowance as well as pension benefits of PBORs are determined on the basis of total of these pay components which constitute the last drawn pay. While denying these components of Last drawn pay of ESM for re fixation of Pay and on the other hand, considering Special allowance on the re employed scale itself is a clear indication of double standards and contradiction to natural justice.

g) To justify excluding MSP from re-fixation, IBA in its annexure 2.1(ii) says that the benefit of MSP is accorded to the Ex servicemen in pension and Ex servicemen are allowed to draw entire pension. Whereas these factors mentioned cannot be considered for excluding MSP from re-fixation of pay as DoPT letter No. 3/19/2009-Estt (Pay II) dated 05.04.2010 through 4(b) i, 4(c),

 4(d)i clarifies that Ex servicemen can avail the benefit of the entire pension and pension equivalent of retirement benefits. and also the O.M. dated 08.11.2010 also clarifies about MSP as “Hence, in respect of all those Defence officers/Personnel whose pension contains an element of MSP, that need not be deducted from the pay fixed on re-employment”. If we apply this silly logical conclusion given by IBA for excluding MSP, then Pay in band and Grade pay which are part of the pension also may be excluded.

 3. Hence, you can see that the IBA had referred to inappropriate and insufficient data and grossly misinterpreted and violated many existing Government policies and guidelines. Your letter dated 30th December 2013 clearly instructs IBA also to clarify the date of implementation of these guidelines, prospective or retrospective and the mode of tackling effect of financial implications, which IBA did not adhered to.

4. Most of the PSU banks complete the pay fixation of Ex Servicemen re-employed after six months of joining and their pay is fixed at a stage just above the Last drawn pay by them in Defence forces, which is the correct method to do. But now IBA has asked to review the pay fixation done so as per their new guidelines, which will result in removing the major part of the pay so fixed and the very purpose of re fixation for the purpose of protection of Last drawn pay by an Ex Servicemen will be impaired. Deduction of the pay already paid for the last three or four years would also result in huge financial loss to individuals and imbalance their financial stability which in turn may cause huge embarrassment to the new Government which is “determined to do everything to repay the debt of our brave and selfless soldiers”.

5. My Case - My basic pay in Indian Air Force was Rs 10670 and total emoluments was Rs 17287 including MSP as on 31.12.2006 as per IV CPC. The basic pay fixed by bank was Rs Rs 11100 including MSP & Spl Allowance of Rs 500 and total emoluments was Rs Rs 18557 as on 30.11.2011 an increase of Rs 1270. The bank ignored the inflation raise from the year 2006 to 2011. If MSP withdrawn I would be earning an amount of Rs 15854 a reduction of Approx 8.5% of pay when compared to IAF pay. This condition is faced by many Ex-Servicemen and bank completely ignored in projecting our case. The copies are attached.

6. So taking into consideration of the facts stated above, we urge you to instruct the IBA to withdraw their circular immediately and also to issue a new order to include all the components of last drawn pay by Ex servicemen while fixing their pay on re-employment in PSU banks, which will be a big relief to thousands of Ex servicemen who had sacrificed the best years of their lives in safeguarding our Motherland. I am hoping for a fast and positive action on this sensitive issue.

Thanking you Sir,

Yours faithfully,

Narayanan Ravikumar

Copy to:(Physical Copy Follows)

1) The Secretary
Ministry Of Finance
Department of Financial services (welfare)
Govt. of India
New Delhi.

2) The Secretary (ESW)
Dept of Ex servicemen welfare
5-A, South Block. New Delhi-110011.
Ministry of Defence, Govt of India

3) The Joint Secretary (ESW),
Dept of Ex servicemen welfare
99-A, South Block. New Delhi-110011.
Ministry of Defence, Govt of India

4) The Secretary
Dept. of Personnel & Training
Ministry of Personnel, public grievances and pensions
Govt of India, New Delhi-110011