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

Merger And Consolidation of Public Sector Banks

Central Government UPA has been building pressure on banks to make best efforts for merger and acquisition. But I am unable to understand the motive behind it in Indian perspective. Finance Minister has said that through consolidation, financial powers of banks will improve and they will not only be able to augment efficiency and help in GDP growth but also get success in competing with International big banks.  Here the million dollar question arises whether Late Indira Gandhi had nationalized banks to compete with International banks, whether banks are meant to extend credit in thousands of crores to a few hundred merchants or manufacturers only?

 Has government forgotten the social objective of banks completely?

Is it possible for a government to survive by discarding the interest of common men, farmers, small traders in India? 

 

Is it necessary for India to have bigger banks to extend credit to farmers and small traders who together constitutes 95% of population and without whose support even economic viability of large projects would be at stake?

 It is important to mention here that there is sharp rise in loan portfolio or visible growth in advances of banks in general is not due to financing made by banks to small traders and farmers but only due to bulk financing made to big corporate houses, to 

real estate developers and to infra structure developers.

Does any one in the government or in RBI mean that by merger and enhancing powers of banks, there will be equitable GDP growth in country like India?

Even in America where big banks are many, one out of every seven Americans starves and struggle for earning their bread and butter for at least survival. In India the position is worse than that in USA. In India nine out of every ten Indians are unable to earn sufficient money even for respectful living.  Considerable large proportion of Indian population is suffering from mal-nutrition; they die of curable diseases in want of proper medical assistance and they remain unemployed in want of adequate opportunities.

 

This is India where even federal structure of the country is at stake due to largely growing unemployment and where person like Raj Thakre has been trying hard to disallow Non-marathi to seek employment in Maharashtra and Shiv Raj Chouhan CM says he would not employment to Biharis and North Indian in the state of MP. Besides in majority of villages, small towns and cities there is no proper sanitation facilities, acute scarcity of water and electricity, crisis for medical treatment and what not. This is why I reiterate that Indian environment is different from other developed nations and hence need unique treatment.

It is worthwhile to add here that USA government have realized after fall of big banks and financial Institution during last year that management of big banks is very difficult compared to smaller ones. Still there are about 8000 smaller banks functioning in USA to serve common men. It is also true that 125 banks became bankrupt or closed their shutters during the current year in USA.

 If we talk of India we have less than 30 public sector banks and they are said to be in better health position. They are well scattered in every nook and corner of the country to serve Indians in general. They have to be encouraged to extend maximum help to small borrowers.  They cannot extend any better help to poor person after merger of banks. Then what is the need of merger and acquisition? Why is government bent upon merger Need of the hour is to make them able to cater to the needs of common men.

Even if government feels the necessity of having large banks with huge capital to compete with foreign banks, they can choose to have one or two like SBI or PNB (after merger of SBI with associate banks I think capital size of SBI will be comparable with their foreign counterparts and similarly after merger of PNB with some suitable bank),  At least other banks should be left untouched to serve common men and forget big projects, bulk financing, corporate borrowers completely and concentrate only on small and mid size borrowers i.e. credit upto ten lacs.

 Even if we leave aside the social objective, it is not commercially proposition to build pressure (frequent request by FM or RBI is enough to build pressure) on banks to go for merger and acquisition especially when government have granted economic freedom to individual banks in the era of economic reformation , liberalization and globalization When need will arise banks will themselves strive hard to grow bigger to survive. As of now banks in India are said to be safer than foreign banks. Even government has admitted it repeatedly.

Inspite of all, if government still consider it better to go for merger , I would like to suggest our Finance Minister to merge all PSBs including SBI and make them one entity like Income Tax department and other departments of Government of India so that there be no unwarranted interest rate war, no case of multiple financing, no case of take over at the cost of bank’s interest and no unhealthy competition as prevalent in banking industry. There will be unified effort to recover the money from recalcitrant borrowers. Banks will be able to check money laundering in a better way .People will not get opportunity to park their black money in different branches of different banks.

Need of the hour is to strengthen the existing structure of banks, make them more and more efficient and enthusiastic. Government should make efforts for repayment of loan and for this purpose make water tight laws to ensure cent percent recovery of loan from willful defaulters so that proportion of dead money in bank’s balance sheet comes down and they can afford and generate will to make finance to common men. Present scenario is that branch manager of every bank’s branch is afraid of extending credit to small borrowers in fear of account going bad and lastly added to Non Performing Asset.

Letter To FM On Pension Issue

Letter to Finance Minister for Pension to RESIGNEES-By Forum of Retired Bank Employees

FORUM OF RETIRED BANK EMPLOYEES

C/O National Institute for Banking Education and Research

K – 5, Induprabha Society, 490, Narayan Peth Pune 411 030

E mail: niberpune@yahoo.com, Phone: 020 24458228

Letter No. FORUM/IInd Pen Option/2014/                                                  20.06.2014

To,

Hon. Finance Minister,

Shri. Arun Jetliji,

North Blocks,

New Delhi 110 001

 Respected Sir,

                                              Ref: Bank Employees Pension Scheme.

 Please accept our heartiest congratulations for grand victory in the general elections 2014 and your nomination as Finance Minister of India. We are confident that under your stewardship our economy will rise to new highs and will project the inherited strengths and abilities of leadership before the world.

 We take this opportunity to introduce ourselves as retired bank employees’ forum working for the betterment and welfare of retired bank employees. Since inception we are working for the cause of retired bank employees for over last 25 years. We are writing this letter to appraise you about the problems that are being faced by retired bank employees in general and resigned bank employees in particular.

 In the year 1995 Pension Regulations were introduced in the Banking Industry for the first time. However due to derogatory clause of service break for participation in strikes, number of employees and officers did not opt for the pension and preferred to continue with the provident fund option. Later in 1997 this derogatory clause was removed from the pension scheme but no fresh option was extended to the employees who had not opted for pension for the same. Since then the bank employees were insisting for second option of pension and that was overlooked by the managements of banks / IBA / Government of India. Finally in 2008 it was principally agreed between the managements of banks and unions of award staff and officers to work out the modalities for second option of pension. In 2010 the issue was settled amicably and second option of pension has been extended to those who were in the service of bank and did not opt for pension in 1995. Agreement on second option of pension was signed on 27.04.2010 between the award staff unions and IBA and a joint note on the similar lines was signed between the officers’ associations and IBA.

 While extending the first and second option of pension in 1995 and 2010 the employees who had resigned from the service of the bank were not made eligible to opt for the pension. Similarly the officers who had voluntarily retired under the respective schemes of banks were also not made eligible for the pension option. However after protracted legal battle the officers who had voluntarily retired from the bank’s service were made eligible to opt for pension and accordingly they started receiving the pension. The only category of employees / officers who had resigned from the services of the banks is left out of the pension scheme. The number of such left out employees / officers is not more than 2% in the banking industry as per rough estimates. A number of cases were filed in various high courts and the cases have been decided either way by both High Courts and Supreme Court of India. The brief history is as under.

 1)      Pension agreement was signed in October 1993 and in April 1994 IBA forwarded the draft pension regulations to all the banks for adoption by their respective Board of Directors. The Regulation 10 in the draft regulations deals with forfeiture of service and it states “Dismissal, termination of or resignation by an employee from the service except where the Service Regulations / Service Rules / Settlements do not disentitle such employee from receiving superannuation benefits shall forfeit his entire past service and consequently shall not qualify for pension payment.”

2)      While carrying this provision in the Pension Regulation 1995 as Regulation 22 the words “except where the Service Regulations / Service Rules / Settlements do not disentitle such employee from receiving superannuation benefits” are omitted. This has changed the very purpose of the Regulation.

3)      Regulation 31 and Regulation 33 of Pension Regulation deals with compassionate allowance and compulsory retirement pension. These regulations provide that “The authority higher than the authority competent to dismiss or remove or terminate any employee from service  may sanction a compassionate allowance not exceeding two-thirds of the pension which would have been admissible to the employee on the basis of the qualifying service rendered up to the date of his dismissal, removal or termination.” The Regulation 33 provides “An employee compulsorily retired from service as a penalty may be granted by the authority higher than the authority competent to impose such penalty, pension at a rate not less than two-thirds and not more than full pension admissible to such employee on the date of his compulsory retirement if otherwise he was entitled to such pension on superannuation on that date.”

4)      After going through the Paragraph 2 & 3 above you will appreciate that the act of resigning from the banks service is so such serious that it cannot be pardoned whereas the others who are dismissed, removed, terminated or compulsorily retired under penal action are made eligible to draw their pensionary benefits.

5)      The Bank Employees Pension Regulations are based on the Central Civil Pension Regulations and it has been very specifically mentioned in Regulation 56 of Bank Employees Pension Regulations 1995, that “in case of doubt, in the matter of application of these Regulations, regard may be had to the corresponding provisions of Central Civil Services Rules, 1972 or Central Civil Services (Commutation of Pension) Rules, 1981 applicable for Central Government Employees with such exceptions and modifications as the Bank, with the previous sanction of the Central Government, may from time to time, determine.”

6)      A provision exists under the Officers Service Regulations 19 that enables the management to take review of any officer after completing 30 years of service or 55 years of age whichever is earlier and to retire any officer prematurely before superannuation. The proviso under Regulation 19(1) reads as “Provided also that nothing in this Regulation shall be deemed to preclude an officer employee from retiring earlier pursuant to the option exercised by him in accordance with the rules in the bank.” Based on this regulation and the proviso there-under some of the banks have prepared the Voluntary Retirement Scheme for officers’ community. The scheme prepared by these banks under Regulation 19 of Officers Service Regulations is not uniform and varies mainly in respect of service criteria. All the other service regulations are uniformly applicable to all the banks.

7)      Under Pension Regulations 1995 any bank employee either award staff or officer is allowed to retire voluntarily from the service at any time after completion of 20 years of service. The employees who are not covered under the Pension Regulations are however not allowed to retire voluntarily. As mentioned in earlier paragraph the officers of some of the banks are allowed to retire voluntarily as per the schemes under Regulation 19(1). The employees and officers are thus discriminated against both amongst each other and within the class.

8)      Banks like Canara Bank, after introduction of the Pension Regulations modified the Voluntary Retirement Scheme and brought the service criteria to 20 years at par with Pension Regulations.

9)      The Central Civil Services Pension Rules 1972, Regulation 5(1) reads “Any claim to pension or family pension shall be regulated by the provision of these rules in force at the time when a Government servant retires or is retired or is discharged or is allowed to resign from service or dies, as the case may be.” This clearly indicates that one who is allowed to resign is eligible to claim the pension.

10)      The provisions for resignation and voluntary retirement for bank employees are tabulated hereunder.

No	Resignation	Voluntary Retirement
1	Notice of one month in case of award staff and 3 months in case of officers is necessary	Notice of 3 months in case of both the award staff and officers is necessary
2	Acceptance of notice is must for a both award staff and officers	Acceptance of notice is must for a both award staff and officers
3	The terminal benefits like Provident Fund and Gratuity is paid as per rules	The terminal benefits like Provident Fund and Gratuity is paid as per rules
4	Leave encashment up to 50% of the privilege leave at credit is allowed.	Leave encashment up to 100% of the privilege leave at credit is allowed.

11)      From the table above you will definitely appreciate that there is no difference as far as resignation or voluntary retirement in case of bank employees.

12)      Hon. Supreme Court in case of Mr. Sheelkumar Jain Vs New India Assurance Company (Civil Appeal No. 6013 of 2011) has dealt this particular aspect and has upheld that where the resignation with due notice is accepted by the competent authority it should be treated as voluntary retirement. The Hon. Bench states asunder. In case of Bank Employees Pension Regulation 1995, Regulation 29 deals in Voluntary Retirement Pension and that in case of Insurance Pension Regulation 1995 Regulation 30 deals in Voluntary Retirement Pension. In both the cases the Regulation 22 deals in Forfeiture of Service.

“Clause 22 of the Pension Scheme, 1995 states that resignation of an employee from the service of the Corporation or a Company shall entail forfeiture of his entire past service and Consequently shall not qualify for pensionary benefits, but does not define the term "resignation". Under sub-clause (1) of Clause 30 of the Pension Scheme, 1995, an employee, who has completed 20 years of qualifying service, may by giving notice of not less than 90 days in writing to the appointing authority retire from service and under sub-clause (2) of Clause 30 of the Pension Scheme, 1995, the notice of voluntary retirement shall require acceptance by the appointing authority. Since voluntary retirement' unlike `resignation' does not entail forfeiture of past services and instead qualifies for pension, an employee to whom Clause 30 of the Pension Scheme, 1995 applies cannot be said to have `resigned' from service. In the facts of the present case, we find that the appellant had completed 20 years qualifying service and had given notice of not less than 90 days in writing to the appointing authority of his intention to leave service and the appointing authority had accepted notice of the appellant and relieved him from service. Hence, Clause 30 of the Pension Scheme, 1995 applied to the appellant even though in his letter dated 16.09.1991 to the General Manager of respondent no.1-Company he had used the word `resign'.”

13)      However unfortunately in the case of Mr. M. R Prabhakar Vs. Canara Bank (Civil Appeal Nos. 7188 -7191 of 2012, the other bench of Hon. Supreme Court took a different view and has stated in the judgment as under.

“Learned Counsel appearing for the Appellants have placed heavy reliance on Sheelkumar Jain (supra) and submitted that in the light of that judgment, the decision rendered in Sanwar Mal (supra) requires reconsideration. We find it difficult to accept the contention raised by the Learned Counsel appearing for the Appellants.

We may point out in Sheelkumar Jain (supra) that this Court was dealing with an insurance scheme and not the pension scheme, which is applicable in the banking sector. The provisions of both the scheme and the Regulation are not pari materia. In Sheelkumar Jain case (supra), while referring to Para 5, this Court came to the conclusion that the same does not make distinction between 'resignation' and 'voluntary retirement' and it only provides that an employee who wants to leave or discontinue his service amounts to 'resignation' or 'voluntary retirement'. Whereas, Regulation 20(2) of the Canara Bank (Officers) Service Regulations 1979 applicable to banks, had specifically referred to the words 'resignation', unlike Para 5 of the Insurance Rules. Further, it is also to be noted that, in that judgment, this Court in Para 30 held that the Court will have to construe the statutory provisions in each case to find out whether the termination of service of an employee was a termination by way of resignation or a termination by way of voluntary retirement.”

14)      The inference drawn by the Hon. Bench in the case of Mr. M. R. Prabhakar Vs Canara Bank that in the case of MR. Sheelkumar Jain, the Court was dealing with an insurance scheme and not the pension scheme is not correct and is far from the facts. This has nothing but miscarriage of facts and justice.

15)      The writ petitions filed by the resigned officers from Vijaya Bank were decided in favour of the officer employees at the Karnataka High Court. After a protracted litigation through SLP, Review Petition and SLP thereafter these 22 officers are finally allowed to opt for second pension option in 2014 and they have been paid the pension along-with the arrears from 27.09.2009.

16)      One more case from Bank of Baroda has been decided in favour of the employee at Supreme Court where the employee was dismissed with terminal benefits was initially denied the pension by the bank. The case No. Civil Appeal No. 10956 of 2013 arising out of SLP No. 17054/2009 in respect of S. K. Kool Vs Bank of Baroda is decided on 11.12.2013. In this case the spirit of the Regulation 10 of draft Pension Regulation 1993 and not the modified Regulation 22 of Pension Regulation 1995 (on which the IBA is insisting) is upheld.

17)      A number of writ petitions are pending in various high courts throughout the country on this issue for justice. As two different and contradictory decisions are given by the apex court the situation is turned in to mess. Hence the issue needs to be looked in to afresh.

18)  The number of employees who have resigned from the services of the banks is hardly ranging between 1 – 2 % of the total retired employees and below 1 % of the serving employees. The financial burden of second pension option of such resigned bank employees can be easily absorbed by the banks without much disturbing their profitability. Even the pension funds of individual banks are in a position to take this additional load.

19)  The new Government has taken certain initiatives for senior citizens. As reported in the media it is a welcome step by the Government to start pension payment at the doorsteps of those who are not in a position to visit the bank branches. On this background denial of pensionary benefits to the resigned bank employees is difficult to digest.

20)  A small section of resigned bank employees is now getting the pension after the intervention of the Hon. Supreme Court and the other group is denied the same that leads to violation of Article 14 of the Constitution of India as this act of IBA and banks discriminates the resigned bank employees creating two artificial classes in a homogenous group.

 We therefore request your good self to look in to the matter after taking all the facts narrated above and advise IBA and other concerns to consider the issue positively and reduce the hardships of the senior citizen bank employees who had resigned from the service of the banks after putting in unblemished service in their hay days.

 Thanking you,

 Yours faithfully,

 Vice President."

IBA Don't Care Wage Hike, Not Even Customers

Banks’ Top Brass Needs to Develop Customer-Friendly Sense & IBA Needs to Work Towards Their Objectives-By Rajesh Goyal (allbankingsolutions.com)

When last week in a newspaper I read the RBI dictate “No late fees on credit card dues for a month”, I thought of writing this article as on number of occasions  during my over 30 years service in PS Banks,  and even afterwards, I have been wondering why RBI has to come to the rescue of general public on such issues.
  

I feel that whenever such  a dictate is  issued by RBI, the policy makers in banks ( Public Sector as well as more Private Sector banks ), must put their head in shame that  Indian banking Regulator has to come to the rescue of general public, put an end the policies of banks which are NOT customer friendly.  Similarly the Chairman of IBA and Chief Executives  of IBA also need to feel ashamed as they failed in their duty  to meet the objectives for which IBA was established.   Let me explain why I feel  they need to be accountable in this respect.    

 

We come across frequently RBI guidelines where they issue new dictates to reign in the anti public policies,  which regulator views as to be for fleecing the customers.  Question arises who are the people responsible for bring such policies in the realm of banking circles.   Are those people are so insensitive and dumb that they can not read the pulse of the general public ?   If they are so, how come they have reached up the ladder so high ?

 

My experience is that usually such policies are initiated by Private Sector banks, but soon copied by Public Sector banks.    We all know that there exists a class of sycophants in PSBs, who are always looking for some new trends for copying.   Thus when such policies are introduced by Private Sector banks and these come to the knowledge of such sycophants, they immediately start the process of introducing the same in PSBs too, and try to take credit for so called "innovative ideas".    These sycophants will come out with comprehensive note to CMDs / EDs / GMs claiming these to be innovative ideas in the industry which will help in  increasing income of the banks.  Then they push through such policies.   The worst part is that most of PSB’s CMDs / EDs / GMs who are in the habit of encouraging sycophants,  accept these anti-customer suggestions without applying their own mind.    Once some PS Banks have implemented these,  even other reluctant banks cave in due to peer bank pressure and high profiled sycophants.

 

We have seen RBI has issued guidelines, thereby stopping banks  for charging for Not Maintaining Minimum Balance in SF Accounts,  Pre-Payment Penalty on Housing, Auto loans,  High Late Payment Fees on Credit Cards etc etc. 

Now question arises whether regulator has to waste his time in reigning banks for immoral or anti-customer policies of banks ?   Should RBI's job be not  focused on much higher level of policy making concerning the country’s economy.   However, top bank bosses force RBI to stoop to this level for micro management, purely due to anti-customer attitude of such bankers.

 

This brings me to the role of IBA.  Our great IBA is at present under lens of common bankers on account of wage revision.   I am sure majority of bankers agree that their role on this subject is negative or anti-employees.    Leaving wage revision for discussion in other articles, I would like to now as to how many times the Chairman of IBA has gone through “Objectives of IBA”?  Can he recall more than 50% of these objectives orally (Bankers will recall that they are asked in their interviews about mission and vision statements).   I am sure he will fumble.   One of the objectives of IBA is “To project a good public image of banking as a service industry and develop good public relations”. (Click here to read all 19 objectives of IBA)


When last week in a newspaper I read the RBI dictate “No late fees on credit card dues for a month”, I thought of writing this article as on number of occasions  during my over 30 years service in PS Banks,  and even afterwards, I have been wondering why RBI has to come to the rescue of general public on such issues. 
 

I feel that whenever such  a dictate is  issued by RBI, the policy makers in banks ( Public Sector as well as more Private Sector banks ), must put their head in shame that  Indian banking Regulator has to come to the rescue of general public, put an end the policies of banks which are NOT customer friendly.  Similarly the Chairman of IBA and Chief Executives  of IBA also need to feel ashamed as they failed in their duty  to meet the objectives for which IBA was established.   Let me explain why I feel  they need to be accountable in this respect.   

 

We come across frequently RBI guidelines where they issue new dictates to reign in the anti public policies,  which regulator views as to be for fleecing the customers.  Question arises who are the people responsible for bring such policies in the realm of banking circles.   Are those people are so insensitive and dumb that they can not read the pulse of the general public ?   If they are so, how come they have reached up the ladder so high ?

 

My experience is that usually such policies are initiated by Private Sector banks, but soon copied by Public Sector banks.    We all know that there exists a class of sycophants in PSBs, who are always looking for some new trends for copying.   Thus when such policies are introduced by Private Sector banks and these come to the knowledge of such sycophants, they immediately start the process of introducing the same in PSBs too, and try to take credit for so called "innovative ideas".    These sycophants will come out with comprehensive note to CMDs / EDs / GMs claiming these to be innovative ideas in the industry which will help in  increasing income of the banks.  Then they push through such policies. 

  

 

 

 The worst part is that most of PSB’s CMDs / EDs / GMs who are in the habit of encouraging sycophants,  accept these anti-customer suggestions without applying their own mind.    Once some PS Banks have implemented these,  even other reluctant banks cave in due to peer bank pressure and high profiled sycophants.

 

 

 

 

 

 

 

 

 

 

 

We have seen RBI has issued guidelines, thereby stopping banks  for charging for Not Maintaining Minimum Balance in SF Accounts,  Pre-Payment Penalty on Housing, Auto loans,  High Late Payment Fees on Credit Cards etc etc. 

Now question arises whether regulator has to waste his time in reigning banks for immoral or anti-customer policies of banks ?   Should RBI's job be not  focused on much higher level of policy making concerning the country’s economy.   However, top bank bosses force RBI to stoop to this level for micro management, purely due to anti-customer attitude of such bankers.

 

 

 

 

 

 

 

 

 

 

This brings me to the role of IBA.  Our great IBA is at present under lens of common bankers on account of wage revision.   I am sure majority of bankers agree that their role on this subject is negative or anti-employees.    Leaving wage revision for discussion in other articles, I would like to now as to how many times the Chairman of IBA has gone through “Objectives of IBA”?  Can he recall more than 50% of these objectives orally (Bankers will recall that they are asked in their interviews about mission and vision statements).   I am sure he will fumble.   One of the objectives of IBA is “To project a good public image of banking as a service industry and develop good public relations”. (Click here to read all 19 objectives of IBA)

Is IBA merely a place for parking retired bankers / benefits to serving bankers,  so that they can have easy life as they are in good books of GoI or have the right connections in Government ?  Do they not have any responsibility towards bank customers?  Can  IBA absolve itself of all the responsibilities by claiming that it being a private body (funded by banks !) considers itself above law and claims to be out of RTI Act?  It seems to be responsible to nobody as GoI or RBI too have hardly ever taken to task the IBA for not working towards their defined objectives.   
               

Whenever, RBI comes with dictates like stopping usurious charges for maintaining minimum balances or banning the pre-payment penalty on loans or credit card late fee payments, it is actually a castigation on banks in general and IBA in particular.  Does IBA not feel that such immoral charges actually damage the good public image of banking as a service industry?   If it feels so, then what action it has taken to stop banks from charging fees which have to be banned by RBI ? If they feel that banks were right, then why IBA has not the guts to protest against RBI dictates.  I am of the firm view, RBI must censure IBA for being mute spectator to such fleecing of customers by banks.  Who should compensate customers who have already been charged such immoral fees / charges / interest ?  We expect Automakers to recall the vehicles in case any deficiency is found at a later stage, but Bank management in India are above the law and nobody ever even thinks of refunding of such charges after RBI has declared these to be wrong.  Is this called Good Governess ?

 

I know some common bankers, top management, IBA may not agree with my strong views.   In such a situation, rather than cursing me for these views, they should have the guts to protest against RBI for issuing such dictates.  I wonder what would have happened to common customer if we did not have a customer friendly regulator.  Let these people, but I will speak what I feel to be correct.

 

Let me now discuss the long term impact of such policies of banks on the reputation of banks and common bankers.  Such rules may have been introduced by banks with good intentions to generate additional revenue and punish some defaulters.   However, when even a single customer has to pay (Rs 500 to Rs 1000) for unintended withdrawal from SF account or delay in credit card payments, he quotes this to 10 of his friends about the immoral and arrogant attitude of banks. Thus, the image of bank and bankers gets a big hit and you start losing public sympathy.   Thus policies should be such that these are NOT  penal in nature for honest customers or who make intended slips / delays in payment or withdrawal.  Banks can always  charge a small higher interest (say instead of 12%, let them charge 14%) but not penal fee / interest.   IBA and top management needs to understand difference between penalty and gentle reminder to follow the rules.

 

The golden rule while framing such policies is that “you should try to imagine the feelings of a person who is earning say Rs 15,000 per month (for the whole family) but forgets to deposit his dues by two or three days, and bank decides to charge Rs 1000 for the default”.   We know our Electricity Boards, BSNL / MTNL too charge for delays, but it is nominal amount of Rs 50 or so.  Thus, nobody makes a hue and cry as it is a gentle reminder to be careful in future, but banks have tried to fleece through penalties.

 

I write such articles to awaken the conscience of common banker, who has been demoralized to an extent that he either fails to take note of such things or if he notes the same,  is unable to express due to fear of being ridiculed by Circle Heads / Regional Heads / GMs in the open meetings (I too faced such issues on few occasions when I used to question such guidelines during my service days).  Therefore, bankers may not be able to take CMDs / EDs head on, yet they need to read these articles to at least remain awakened to what is actually good for banks and the country.  Bankers need to support RBI whole heartedly though banks may be losing some revenue.

Bank CEO To Be More Accountable

LONGER INNINGS FOR STABILITY
* Fixed tenure of 5 years to CMDs will provide operational stability
* Bank chiefs will become more accountable and get longer time to execute ideas
* Nayak panel had also proposed 5-year term for CMDs and 3-year for EDs
* Decision not easy for FM as other PSU chiefs will also ask for 5-year term
* FinMin also considers changes in appointment procedure of whole-time directors
* It might also revise criteria for selection of non-official directors on bank boards
* Bank board reforms to improve their corporate governance

FinMin mulls fixed 5-year term for PSB chiefs-Business Standard

And, 3 years for EDs, beside changes in selection criteria for boards; proposals discussed with Finance Minister Arun Jaitley

  

The Union finance ministry is considering a proposal to provide a fixed tenure of five years to heads of public sector banks (PSBs). The aim is more operational stability and accountability.

It is also considering changes in the appointment procedure of wholetime directors and revising the criteria for selection of non-official directors on PSB boards.

“We have proposed a fixed tenure of five years for chairmen & managing directors of PSBs,” said a ministry official. The department of financial services has discussed its proposals with minister Arun Jaitley, who will decide.

The department has argued that a fixed tenure would give CMDs enough scope to strategise and take action, beside increasing their level of commitment and accountability.

The problem, though, is that heads of public sector undertakings (PSUs) in other sectors would also ask for a fixed tenure. The retirement age for all PSU executives is 60 years. So, generally, the term of a CMD varies between one year and five years.

At present, many suitable candidates are not selected because they have less than two years of residual service, after serving as executive director (ED) of a bank for at least one year. Both are minimum conditions.

The P J Nayak committee on governance changes in PSBs had also recommended a minimum five-year tenure for CMDs and a minimum three-year tenure for EDs.

The changes to bank boards are aimed at improving their corporate governance. The ministry noticed a lack of transparency in the appointment of non-official directors on PSB boards. Concerns were also raised on the appointment of shareholder and non-official directors on bank boards, as most of them were usually chartered accountants; it was felt they could use their position to influence decisions. The finance ministry wants to induct professionals from various fields on boards.

The board of a public sector lender usually comprises a CMD, up to three EDs, a nominee of the government (mostly a finance ministry official) and one nominee from the Reserve Bank of India, two employee union nominees, up to three shareholder directors and two non-official directors.

Link Business Standard