IBA DEFRAUDS BANK EMPLOYEES AND TARNISHES THE IMAGE OF THE GOOVERNMENT

C N VENUGOPALAN

Former Director (GOI Nominee) State Bank of Travancore & Ex-Manager, Union Bank of India

1300 Keller Pkwy, Apt # 2015, Keller – 76248, TEXAS – USA

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            No. 160815                                                                                15^th August, 2016

The Hon’ble Prime Minister,      
 Prime Minister’s Office,

 New Delhi -110 001

Most Venerabe Prime Minister,

IBA DEFRAUDING BANK EMPLOYEES AND TARNISHING THE IMAGE OF GOVERNMENT

I take the privilege of submitting the following for your kind consideration and for doing as appropriate.

Indian Banks’ Association (IBA), with its rotten, anti-labour,  anti-constitutional and unlawful actions was all along tarnishing the very image of the government.  This unregistered organization had been siphoning huge public money from public sector banks for it disastrous operations.  The amounts are sanctioned by its own members who are the Chairmen of banks, making the Boards of banks a special purpose vehicle for approving the defalcation.    Its  members  have integrity only till  they are booked for offences.  They   include people like Shri. K M Margabandhu, one time CMD of UCO Bank, Mr. V Mahadevan, one time Managing Director of SBI, Shri. S K Jain, former CMD of Syndicate Bank,  Shri. Shyamal Acharya, DMD of SBI who were booked for offences committed.  History tells that New Bank of India, one of the 20 nationalised banks vanished into obscurity, thanks to the contribution of another bank head.  IBA is not publishing its accounts, which is improper.  Since it functions entirely on public money, it is inevitable that the details of amounts it received as subscription or whatever other nomenclature from all public sector banks  be collected at least for the past twenty to thirty years for analysis and future action.   

The huge NPAs of Public Sector Banks is the contribution of the members of IBA. The (ir) responsible people get absolved of the accountability as they get their sanctions approved by the boards of banks by making the boards a tool for easy escape.    While squandering public money as bad loans they had not been paying compensation for labour, thus creating a slave dynasty in independent India in its banking industry, bringing shame to the government and to the nation.   The worst hit are the senior citizens who toiled in banks in their heydays, whose retirement benefits are heinously looted.  Their pension is based on the wages of the employees on rolls and is not revised with wage revision taking place from time to time.  With scant respect to the Indian Parliament which sanctioned the Pension Regulations of banks, due pension is denied in banks.    In gross breach of regulation 56 which makes it limpid that Pension Scheme in banks is on the same pattern of Central Civil Pension,  pension in banks is never revised ever since its inception in 1995, thus defeating the very purpose of it.

THE MISCHIEF TO THE SENIOR CITIZENS WHO DESERVE CARE EMPATHY OF THE GOVERNMENT IS DONE WHEN PENSION FUNDS OF ALL PUBLIC SECTOR BANKS HAVE AMPLE MONEY TO PAY TWO TO FOUR TIMES THE PRESENT PENSION TO ALL THEIR PENSIONERS AND WHEN PAYMENT OF PENSION DOES NOT IN ANY WAY AFFECT THE PROFITS OF THE BANKS AND THE GOVERNMENT TOO DOES NOT HAVE TO MAKE A BUDGETARY ALLOCATION FOR IT.    IBA PUTS THE GOVERNMENT AND THE NATION TO SHAME THROUGH ITS NEFARIOUS ACTIONS AND MAKES THEM UNPOPULAR SINCE PUBLIC SECTOR BANKS ARE “STATE” AND ARE MADE INSTRUMENTAL TO THE EVIL GAMES.   IT IS THUS TRANSFORMING THE SACRED CONSTITUTION OF INDIA INTO A SHOW PIECE BY PERPETRATING DISCRIMINATIION OF AN EXTREME NATURE, PUSHING THE BANK EMPLOYEES INTO THE NETHERWORLD.

Initially, when the Pension Scheme was commissioned in banks through the Bank Employees’ Pension Regulations in 1995  as a piece of subordinate legislation pursuant to Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 , public sector banks, at the behest of IBA,  kept majority of employees outside the scheme by infusing a clause under regulation 22 (4) (b) which gave banks powers to  forfeit the entire past services of an employee for participation in strike and had the effect of depriving pension to the employee.  This was detrimental to an employee opting for pension as Pension Scheme substituted the CPF Scheme and he had to irrevocably surrender his EPF balance to the Pension Fund for joining Pension Scheme.  Again, it was discriminatory as participation in strike would affect only the employee opting for pension who will lose his terminal benefit of Pension on participation in strike and those remaining in CPF Scheme would not lose their terminal benefit of CPF. 

IBA INTERCEPTED AND TRESPASSED THE GOVERNMENT DIRECTIVE VIDE F NO.4/8/4-95-IR DATED 24^TH DECEMBER, 1997,  RECEIVED BY IT  ON 27^TH DECEMBER, 1997, DIRECTING IT TO ADVISE MEMBER BANKS SCRAP THE STRIKE CLAUSE IN REGULATION 22 (4) (B) AND TO GIVE EFFECT TO IT,   Though member banks amended the regulation, they did not give effect to it by extending options to those who could not opt for pension because of the presence of the deleted clause in it.   To cite an example, Union Bank of India clandestinely kept the amendment  in camera  and published it among employees AFTER AN INORDINATE DELAY OF 57 MONTHS OF THE GOVERNMENT DIRECTIVE through its Staff Circular No.4904 dated 8^th October, 2002 only, THAT TOO WITHOUT EXTENDING THE INTENDED FRESH OPTION TO THE TARGET GROUP, THUS THWARTING THE GOVERNMENT DIRECTIVE.   IBA and the key men of banks thus duped nearly six lakhs of bank employees, depriving them of their statutory right released by the government, exposing them to destitution as the QUID PRO QUO for serving the banks during their lifetime.  It put about 50,000 plus retired bank employees in cross roads for about a decade without pension, subjecting them to destitution.  

It was after a decade of struggle I made with Union Bank of India, IBA and labour organizations that IBA signed a Joint Note on 27.04.2010 extending fresh options to those who missed it earlier.     BUT WHILE RECTIFYING THE  SINGLE ANOMALY OF NOT GIVING OPTION, IBA IMPLANTED MULTIPLE ANOMALIES IN THE PENSION SCHEME IN DEROGATION OF THE PENSION STATUTE by extending  the  option  subject to untenable conditions which are illogical, irrational and discriminatory making them unconstitutional also as stated infra:

01.   Employees joining Pension Scheme were given pension from an irrelevant date of 27.11.2009 when regulation 52 (1) of Pension Regulations stipulated that a pension shall become payable on the day following the date on which an employee retires.

02.   Retired employees opting for pension shall pay to the Pension Fund a contribution of 56 percent  of CPF paid on retirement (in addition to refund of CPF) and employees on rolls a sum equivalent to 2.8 times pay for November, 2007 when regulation 5 (3) and 11 categorically fixed the banks as the sole contributor to the Pension Fund.

Both the conditions intercepted the Pension Regulations. The Boards of banks are specifically prohibited framing an amendment which prejudices what is done earlier under a regulation vide sub-sections 1 and 4 of Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980.    IN SHORT, IT CAN BE NOTICED  THAT THE JOINT NOTES IS DE JURE VOID  AS IT IS INCONSISTENT WITH THE ACT. 

The Joint Note was in the nature of amending the relative Pension Regulations.  It stipulated as conclusion 10 in it that the due procedure of amending the Pension Regulations, vide section 19 (4) of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 shall be done by IBA by forwarding it (Joint Note) along with the scheme of pension to the government for laying in the Houses of the Parliament for their nod.  This due procedure, which was to be done as soon as it was signed, is remaining undone albeit lapse of six years now.   THE JOINT NOTE THUS GOT OBLITERATED AND BECAME VOID.    IT IS ON THE BASIS OF THIS VOID JOINT NOTE THAT IBA MADE PUBLIC SECTOR BANKS DENY PENSION TO THE RETIRED FROM THE DATE OF RETIREMENT TO 27.11.2009 IN BREACH OF REGULATION 52 (1) AND RAISED FROM THE BENEFICIARIES OF PENSION, A CONTRIBUTION TO THE  PENSION FUNDS  OF BANKS  (WHICH THE BANKS THEMSELVES ARE TO CONTRIBUTE PURSUANT TO THE PENSION REGULATIONS) IN  BREACH OF REGULATIONS 5 (3) AND 11 OF THE PENSION REGULATIONS.  

The Joint Note was discriminatory, irrational and unconstitutional and could never be framed by anyone with a trace of sense and wisdom on the following grounds:

01.   Retired employees constituted a similar manner of people who are  to be treated similarly.    Some of them got pension from the date of retirement while other were denied pension from the date of retirement to the arbitrary date of 27.11.2009.

02.   Some people lost pension for periods spanning about 10 years while some others lost it for one month and the remaining did not lose it for any day.  

03.   One who retired ten years back and another who retired one month prior to the date of the joint Note had to pay the very same 56 percent of CPF paid on retirement.  The loss to some people was to the tune of Rs. 8.00 to Rs.10.00 lakhs while some lost to the tune of Rs.1.20 lakh only.

04.   Employees on rolls had to pay 2.8 times pay for November, 2007 while their counterparts who opted earlier did not have to pay anything. 

IT DESERVES SPECIAL MENTION HERE THAT THE OPTION GIVEN THROUGH THE JOINT NOTE WAS THAT TO BE EXTENDED TWELVE  YEARS BACK IN TERMS OF THE GOVERNMENT DIRECTIVE F NO.4/8/4/95-IR DATED 24.12.1997 TO AMEND REGULATION 22 (4) (b) AND TO GIVE EFFECT TO IT.

Another glaring anomaly  is that in terms of regulation 3 of Pension Regulations, the last date of exercising an option was 26.01.1996. No one could be taken into the ambit of the Pension Scheme unless regulation 3 was suitably amended.  In other words the Pension Fund Trusts of banks have no provision to pay pension to those taken into Pension Scheme through the Joint Note dated 27.04.2010 in terms of regulation 3.

IBA WAS ACTING ABSURDLY IN  DISREGARDING THE GOVERNMENT DIRECTIVE F NO.4/8/4/95-IR TO AMEND THE REGULATION 22 (4) (b) DATED 24.12.1997 AND NOT EXTENDING OPTIONS TO GIVE EFFECT TO IT, NOT KNOWING THAT PENSION SCHEME WAS OF A SELF FINANCING NATURE AND PAYMENT OF PENSION WILL HAVE NO IMPACT ON THE PROFITS OF BANKS AS PENSION IS PAYABLE OUT OF PENSION FUNDS WHICH REPRESENT THE DEFERRED WAGES OF EMPLOYEES AND ARE BUILT UP OUT OF THE STATUTORY CONTRIBUTIONS WHICH BANKS WERE TO MAKE UNDER EPF AND MISCELLANEOUS PROVISIONS ACT, 1952 PREVIOUSLY.   

It is pertinent here that after extending pension through the Joint Note, the Pension Funds of all banks had been abounding in resources during the next five years and are capable of meeting two to four times the present pension to all the pensioners.   By way of an illustration, it can be presented that Union Bank had pension Fund of Rs.7,732.57 Crores as on 31.03.2015. The growth in five years till that date was Rs. 6,274.01 Crores. Unlawful contribution collected from employees and retired employees on the basis of Joint Note is Rs. 134.33 Crores.  This, together with compound interest can be repaid in a sum of Rs.300.00 Crores to all.  The amount had been earning compound interest to Pension Fund and the Fund does not suffer any loss in paying it back with interest to all. Even on paying the Rs.300.00 Crores, the growth in five years has a surplus of Rs. 6,274.01 Crores.   This can contain payment of arrears till the date of 27.11.2009 to all the 3,106 to the tune of Rs.2.02 Crores per capita.  The actual arrears payable per capita is only in the range of Rs.15.00 to Rs.30.00 lakhs. Since pension / arrears / interest is payable out of Pension Fund, profits of banks will not be affected.  The pension payment for 2014-15 was only 23.25 percent of the annual growth. It shows the capacity to pay four times the present pension to all the pensioners numbering about 17,579.     

The state of affairs in other Public Sector Banks is also similar. All of them can pay two to four times the present pension to all the pensioners without affecting their  profits.  Public Sector Banks including SBI group had Pension Fund balance of Rs.1,58,782.61 Crores as on 31.03.2014. The present balance is somewhere above Rs.2,00,000 Crores.   In spite of everything, IBA was making banks deny the benefit unlawfully and detain the money of the employees with no benefit either to the banks or to the government, in a senseless way. 

While IBA had been denying the statutorily vested benefit of pension to employees, banks were squandering money to the advantage of affluent big borrowers through interest concessions.  To cite one example,  Muthoot group of concerns availing Rs.10,000 Crores of loans from 42 banks under consortium arrangement was granted interest concession of 3 percent from the card rate of interest.  This deprives banks Rs.300 Crores out of their profits which is going into its kitty.   Banks were donating approximately Rs.1.00 Crore to it on each working day of the year. Such NBFCs lend the money taken from banks at 11 percent to the weak general public at 18 to 24 percent and beyond, levying huge charges also.  The process, dwindles the business of banks, and defeats the very purpose of nationalisation.   There are other activities also, financed at concessional rates. 1,000 such accounts will cause a drain of Rs.3,00,000 Crores to the banking system.   Here is the need for a system of surveillance of rates by an authority.

The industry was undergoing total devastation through IBA.   M V Nair, its former Chairman was reportedly engaging in  “Nav Nirman” in Union Bank.  He set up “Star Union Dai-Ichi insurance and Union KBC Mutual Fund by diverting the deposits and other infrastructure of the bank, thus dwindling its business.   All were lucrative and rewarding to the top management in several ways, at the cost of the Bank.   He found out a solution to the unemployment in his family and close circles.   These are not unpardonable.   But deceiving the work force in the industry as a whole is invariably unpardonable.  Under the stewardship of Mr. Nair, the employees and retired employees in the industry were duped beyond doubt.   

These are not aimed at mudslinging anyone; but brought to your kind notice to describe the style of functioning of IBA.   IBA and its members had been operating like a bedlam with no scruples for their common advantage at the cost of the banking system and its employees.  At any rate, IBA has no justification in taking departure from statute and looting the retired bankers and bank employees on rolls.  What is essential is a mere compliance of the Pension Regulations, 1995 especially with regard to regulation 52 (1), 5(3) and 11 of Pension Regulations which involves payment of pension from the date of retirement to 27.11.2009 and the refund of the contribution raised from employees and retired employees since the Joint Note dated 27.04.2010 had no force of law and is void.  Up-dation of pension in terms of regulation 56 is also another requirement for full and proper compliance.  There is no need for any fresh sanction of any benefit.  “State” not abiding by its own laws and regulations is definitely a catastrophe and pitfall of democracy.

It is very much pertinent to say that bank employees are quasi government employees with nationalisation and government ownership of banks. All policies of the government are implemented through them.  As such, their salary bills are also to be foot by the government.  But since salary bills in banks are appropriated against the profits the employees themselves make in banks, they themselves foot their pay bills giving zero cost to government.     Yet they had, all along, been accorded a step motherly treatment.   The bank officer had a pay of Rs.500/- while the government official in similar level had Rs.450/- only during the 1970s.  Parity of pay was brought in through Pillai Committee Recommendations in 1979 in the pay levels in banks and government.  Though parity of reasoning requires keeping bank pay at least at the level of government pay, it was lesser by Rs.30,000/- to Rs.40,000/- a month prior to the implementation of 7^th Pay Commission.  The bank employees had all along been discriminated in utter disregard to the magnificent Constitution of India.  You will magnanimously agree that this is quite unreasonable.

THROUGH IRRATIONALITIES IN THE JOINT NOTE AND IN THE IMPLEMENTATION OF THE PENSION REGULATIONS, IBA HAS PROVED BEYOND DOUBT THAT IT IS INCOMPETENT TO SIGN ANY WAGE PACT WITH BANK UNIONS AND THERE IS THE NEED FOR A PAYCOMMISSION FOR BANKS TO RENDER JUSTICE TO THE PEOPLE WHO HAVE ILLUMINATED THE VARIOUS SECTORS OF THE SOCIETY. IBA HAD BEEN PERPETRATING DISCRIMINATION AMONG THE BANKING COMMUNITY AS IT SIGNS SEPARATE AGREEMENT FOR NATIONALISED BANKS AND ALLOW STATE BANK OF INDIA TO HAVE HIGHER PAY PACK, THOUGH EMPLOYEES OF ALL BANKS CONSTITUTES SIMILAR MANNER OF PEOPLE.  Adherence  to the Pension Regulations by banks  will help elimination of thousands of writ petitions in the matter across the various High Courts of India, which is a contribution of IBA  and give relief to the Judiciary  which can cater well to the need o f the community.  Bringing bank employees within the jurisdiction of Central Administrative Tribunal is also appropriate as they are quasi-government employees, whose pension is managed by PFRDA from 01.04.2010.

The bank retirees / bank employees who are ‘dalits’  among the working class cannot be wrong if they  perceive that the British who plundered India in the pre-independence days are now incarnate in the banking lords now and they need an evolution into lawful citizens lest our independence shall become mere illusion.  I earnestly request that IBA may be advised to desist from tormenting the image of the government and the heritage of the nation and to undo all wrongs committed through the Joint Note, thus making public sector banks compliant with Pension Regulations in force. 

Thanks and Regards.

Yours sincerely,

C N VENUGOPALAN

 

C N VENUGOPALAN

Former Director (GOI Nominee) State Bank of Travancore & EX-Manager, Union Bank of India

1300 Keller Pkwy, Apt # 2015, Keller – 76248,  TEXAS - USA

Sharing some  banking thoughts with Retiree Friends   

STRANGE!  BANK MEN PAY A TOLL FOR THEIR OWN DESTRUCTION

Bank unions raise a toll from the members for surrendering their rights to the employer and function for the leaders.  They transformed the industry a slave dynasty.

The leaders enjoyed a piggy ride on the back of the members and lived on the subscriptions and levies.  They are loyal to the managements that collect the subscription through salary deduction.   Their locations and salary are safe on pawning the rights of the members.

Look at the present compensation in banks.  Had the leaders been ever alert and agile, any time, for conserving and protecting the rights of members?

Bank employees had better pay than government employees in the past.  It is the remote past, at the time of nationalisation.  Great !,  Unions signed ten Bipartite Settlements in the place of merely six Pay Commissions for government employees.  But bank salary dwindled with each bi-partite settlement.  It is now one half of that of government employees.   Now see the seventh Pay Commission. 

Government implements all its financial policies through banks. Government employees are only drones who watch the game.  Bankers are workers who worked to illuminate the nation but are in darkness now.  They work in hectic mode for six days and the government employee, in leisurely mode for five days a week. The former pays his salary out of the sweat of their own brows though they are also quasi government employees through government ownership of banks and are entitled to be paid by the government.  But the latter alone is paid by the government out of exchequer through budgetary allocations.  Why the discrimination to the bankers alone in compensation?  

Agreements are signed with IBA on wages and pension.  Why are leaders mute on derogation of agreements and statutes by IBA and banks? Do they not have  sense and wisdom?  

Pension was initially denied to employees through clause 22 (4) (b) of Pension Regulations.  When government directed IBA to advise all banks to scrap the clause and give effect to the amendment, leaders did not claim fresh option for pension.  Did they not come across the direction of the government vide F No.4/8/4/95-IR dated 24.12.1997 giving such a direction which reached IBA on 27.12.1997?  Were the unions not hoodwinking the members for IBA?   Can anyone clarify on this?

While option was later given through Joint Note dated 27.04.2010, why did the unions consent  for a contribution by members at 2.8 times pay for November, 2007 and  at 56 percent of CPF from retired  employees to be paid when regulations 5(3) and 11 Pension Regulations fix the banks as sole contributor to the Pension Fund?  Why did they consent for payment of pension to the retired from 27.11.2009 only when regulation 52 (1) stipulated that pension shall commence from the day following the retirement date?   Was any cock-tail influence in the arbitrary, irrational and unlawful terms of IBA which are inconsistent with the statutory Pension Regulations and hence not notified in gazette so far?

When conclusion 10 in the Joint Note specifically stipulated compliance with the due procedure under section 19 of the Banking Companies ( Acquisition and Transfer of Undertakings) Act, 1970/1980 which had to be done as soon as the Joint Note was signed (u. s. 19(4) of the Act) and the compliance is remaining undone in spite of the lapse of six years now, did the unions not notice the breach of the agreement, thus obliterating the Joint Note as a whole?   Why are leaders mute on the breach without challenging it?

Why are the so called leaders not challenging the breach of the vital clause of the Joint Note and the unlawful action of public sector banks in raising an unlawful contribution from their own members and the retired denying pension from the date of retirement to the date 27.11.2009 to the retired?

When Pension Scheme was agreed to be on the pattern of Central Civil Pension and regulation 56 of Pension Regulations enabled any deviation from it only with the sanction of the government,  why bank pension is not revised with Bi-Partite Settlements unlike in the case of government pension which is automatically revised with the implementation of each Pay Commission?  Has any bank obtained sanction of the government to deny revision in pension in the way prescribed in regulation 56?

While the leaders signed the Record Note on 25.04.2015, were they not subscribing to the view of IBA that contractual relationship does not exist between banks and retirees and that there is no provision for updation of pension in banks.  Were bank unions unaware of the statutory relationship of the retired, arising out of the Pension Regulations, a subordinate legislation put in place by the Indian Parliament and of regulation 56 providing for periodical updation of pension for the reason that bank pension  was agreed to be on all fours with Central Civil Pension permitting exceptions with the specific sanction of the government alone?  

When section 10 (7) of the Act assigns a prior charge to superannuation funds over the profits of banks over payment of dividend and regulations 5 (3) and 11 of the Pension Regulations make it clear that the banks shall make requisite contributions to Pension Funds, how the leaders agreed to the contribution by employees and retired employees to the Pension Funds of banks in derogation of laws? Were they not pawning the statutory rights of the members and former members?   How did they consent in the Record Note that  Financial implications will need to be fully examined before any change in benefits payable to pensioners can be considered in the same breath in derogation of the Act and Pension Regulations after telling that they have no mandate for discussing retiree issues?  

Are the leaders unaware that the Pension Funds of banks are abounding in resources and that the amount of pension now being paid is a meager 20 to 25 percent of the annual accretion in Pension Funds  and that, after extension of fresh option, and all banks have the capacity to pay two to four times the present pension to all their pensioners? 

Are the leaders unaware that the Pension Funds are built up of contributions that was previously payable by banks pursuant to EPF Act, 1952 and that the money in the Pension Funds is the money of the employees and not the money of the banks?

Are the leaders not aware that the unlawful contribution raised by banks and held in  Pension Funds as also the detained pension from the date of retirement to 27.11.2009 in it were earning an income in the Pension Funds with compound interest to the Pension Funds and that neither the banks nor the government has zero cost in releasing it to the retirees with similar compound interest and profits of the banks will not be affected in doing so?

Are the leaders not aware that holding the moneys looted from the retired employees and held in the Pension Funds  will not have any purpose unless due benefits are paid as pension liability is reducing through the mortality of pensioners and employees who are recruited after 31.03.2010 who are covered by PFRDA Scheme need not be serviced out of Pension Funds of banks?  

While the Joint Note is de jure void and can be treated as valid only for the purpose of extending an option which was to be given in terms of government communication F No.4/8/4/95-IR dated 24.12.1997, and more so since no amendments to a regulation which prejudice the validity of what is done earlier under a regulation can be made in terms of section 19 (1) and 19 (4) of the Act, and there was breach of the terms of the Joint Note through non-compliance of conclusion 10 in it, what prohibits the leaders from challenging the Joint Note before the Labour Commissioner and securing justice to their members and former members  instead of driving them to the various High Courts at their expense and trouble in the evening of their lives?

We see the leaders agitating against national policies of the government such as merger of banks,  capital infusion, punitive actions against miscreants etc. at the cost of and side tracking cardinal rights and issues of the members and former members  who made them what they are. Do they lack prick of conscience, or are such steps deliberate attempts to patch holes with darkness?  

Are all the above not eye openers to the current members of the unions? Are they sure that similar treatment will not be meted out to them later after paying tolls regularly  to unions during the entire tenure of membership?  Why should they pay a toll for their own destruction?

IF THERE IS ANY ORGANISATION OF BANKERS, WORTH ITS NAME AND IS LOYAL TO THE MEMBERS AND PAST MEMBERS, WHY CAN’T IT CHALLENGE THE JOINT NOTE, WHICH IS VOID FOR NN-COMPLIANCE WITH ITS OWN CONCLUSION 10 AND DEMAND COMPLIANCE WITH THE PENSION REGULATIONS IN FORCE ?   SO LONG AS THEY DONOT DO THIS, THEY HAVE NO MORAL RIGHT TO COLLECT THE SUBSCRIPTION TOLLS.   THE RIGHT PLACE FOR RETIRED BANKERS TO STAGE DHARNA FOR REDEEMING THEIR RIGHTS IS NOT JANTAR MANDAR BUT THE OFFICES OF THE TRADE UNIONS.  IT WILL BE INNOVATIVE AND INEVITABLE.  

I do have a right to think on such lines since a sum of Rs.35.00 lakhs plus due to me as pension is detained in the Pension Fund of Union Bank of India when the accretion in its Pension Fund during the period from  2010 to 2015 has a surplus to pay Rs.2.02 Crores,  per capita as arrears of pension / deferred pension, to all its 3,106 retired employees, encompassed in Pension Scheme through the  Joint Note, without having a pinch on the bank’s profits and I lost my deferred wages on account of the wrong commissions of the organizations. The position in other banks and of other retired employees is also not different.

The above ill-treatment was meted out by the great institution when it owes its very existence in the banking scenario in its name now to me and in spite of having my done very unique contribution to the banking industry as a whole, and I am unaware whether what is narrated in the link infra constitute mischief or good done by me:

        https://drive.google.com/file/d/0B_UI4pgwLPCjaldGSGtEV2RaLTg/view?usp=sharing

       All the above shall be an eye opener to the employees on rolls also as the same fate of the retirees can befall on them too.  Is not regular collection of subscriptions and levies by unions, assuring to protect the rights of members and pawning their rights through each settlement /joint note / record note,  a continuous breach of trust and a crime?

The details of Pension Funds of some of the banks which are readily available are given in the link https://drive.google.com/file/d/0B_UI4pgwLPCjT3hqMGo1c2FoaE0/view?usp=sharing , for the information of anyone who has an academic interest in  it.  The data pertaining to some other banks are lying with me in India in the form of RTI letters to which I have no ready access since I am abroad.  They show that all banks have Pension Funds enough to pay two to four times the present pension to all their pensioners.

Let any one, not necessarily a leader, clarify things. 

-  C N VENUGOPALAN

सत्यमेव जयते

https://drive.google.com/file/d/0B_UI4pgwLPCjWklKcmdyN3NMUmM/view?usp=sharing

LETTER TO H E THE PRESIDENT OF INDIA

LETTER SENT TO HIS EXCELLENCY, PRESIDENT OF INDIA ON PENSION

C  N Venugopalan    (Former Director, State Bank of Travancore and Ex-Manager, Union Bank of India)

“Nandanam”, Kesari Junction, North Paravoor, Kerala -683 513 , e-mail:ceeyenvee@gmail.com, Mob: 9447747994

No.170618                                                                                    18^th June, 2016

His Excellency the President of India,
Rashtrapathi Bhavan

New  Delhi – 110 004

Most Venerable President,

SAVE BANKERS, SAVE INDIA, SAVE DEMOCRACY, SAVE THE CONSTITUTION

I chose to write to you as no one else is to be appraised when the Constitution of India receives a jolt and is in peril.  In pre-independent India, the British plundered the subjects of India as a whole.  In democratic India, the British are incarnate in the bureaucrats that run the government. The plundered are the bankers who implemented the financial policies of the government.  The sanctions of the legislature to them are deprived in a heinous way, in derogations of the statute.  The victims are senior citizens in the evening of their lives, who deserve empathy of the government.  Their wherewithal viz. pension given for making both ends meet is looted by the “state” in derogation of  “Directive Principles of State Policy” and of the Regulations put in place by  the Indian Parliament, thus tormenting the very democratic fabric in a way tarnishing the very image of the government. Indian Banks’ Association ( IBA) is perpetrating this atrocity when pension and pension increase can be given with zero cost to the banks and to the government.   The Banking intelligentsia comprising the heads of Indian banks appears as having no grey matter in their skulls and have  metamorphosed  into criminals to loot the workforce their wages and the former workers, their deferred wages and to detain it,  thus snatching away their bread in a meaningless way.   The heinous crime is staged when there is ample money in the Pension Funds of all banks, which is enough to pay three to four times the present pension to all the pensioners.   The retired bankers are the people who acted as conduit for the overall progress of all neglected sectors and now they are neglected by the MOF Headed by the Minister who took oath in the name of the Constitution to treat all manner of people alike.  Indian Banks’ Association is flying above the Indian Parliament, overriding  the statutes it enacted by it at the behest of the Ministry of Finance, giving rise to a catastrophe in democracy.  The entire matter assumes greater significance in the wake of the OROP for the defense pensioners.

I write this for the sake of about five lakhs plus bank employees and about one lakh retired bank employees who lighted up the whole of India and yet denied their statutorily vested benefits in a way axing the fundamentals of Indian democracy.  The latter are pushed to the corridors of various High Courts in the evening of their lives as their right to live viz. pension is denied through derogation of the Pension Regulations, 1995.  All of them are in cross roads, when their own huge money is unlawfully detained by the Public Sector Banks which are “state” within the meaning assigned to them under the Constitution of India.    

Short Recital:

The Bank Employees’ Pension Regulations, 1995 was put in place as a subordinate legislation pursuant to Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980.  The Act gave a guarantee to the employees of the banks which were nationalized in 1970 /1980 by way of protection of the benefits they were enjoying previously.   The Regulations were statutory and carried the approval of the Legislature as it evolved pursuant to section 19 of the Act.  From the very inception, they were breached and the beneficiaries are denied of the statutorily vested benefits forever, thus resulting in a huge influx of writ petitions across the country in various High Courts.  The victims are senior citizens who sacrificed their whole lives in the process of nation building.  They are pushed to the corridors of Courts in the evening of their lives.  This heinous crime is staged when pension and updation of pension can be given to them with no cost to banks and to the government.  Payment of pension is from the Pension Fund created out of the statutorily deferred wages of employees, which banks were to pay previously pursuant to EPF and Misc. Provisions Act, 1952. The Pension Funds of all Public Sector Banks have money enough to pay three to four times the present pension to all their pensioners. Yet revision in pension is denied to them senselessly.  The Minister of Finance who has taken oath to act with commitment to the Constitution and to extend equal treatment to all manner of people is also paying no heed to the same while neglecting the cardinal issue with no empathy and concern to the senior citizens of banks who gifted a resilient banking system for the nation.

Tracing History:

During the 1970s, Bank Officers had an initial pay of Rs.500/- when the government officer was getting Rs.450/- only.  The higher pay was a consideration for extended working hours and job risks of a financial nature. This, however, created an ethnic prejudice in the minds of government officers who were overseeing banks after nationalisation as they are the masters when banks came under government ownership. This paved way to implementation of Pillai Committee Recommendations in banks to peg down bank pay on par with government pay. Though parity of reasoning required keeping bank pay at least at the level of government pay, it is now lesser by Rs.30,000/- to Rs.40,000/- a month than the other.  Bank employees work for six days in a hectic mode and are less paid while the government officers worked for five days leisurely and are highly paid.  With nationalisation, bank employees are quasi-government employees whose pay bills are to be foot by the government.   However, since bank pay is met out of the profits of banks, the bank employee meets his own salary bill without causing a burden to the exchequer.  The government implements all its financial policies through banks.  In spite of everything, the bank employees are given a step motherly treatment.    Bank pensioners are worst hit as their pension is linked to the pay of employees on rolls and the same is not periodically revised with each Bipartite Settlement unlike in the case of government pension which is revised with implementation of each Pay Commission, though bank pension was agreed to be on the same pattern of Central Civil Pension.

Irony in the matters:

01. Pension and increase in pension are denied in derogation of Pension Regulations when the Pension Fund of all banks have resources enough to pay three to four times the present pension to all the pensioners in the industry.

02. Payment of Pension does not have any impact on the profits of banks as pension is paid out of specific Pension Fund created for the purpose.  The government also does not have to make a budgetary allocation for it. Yet due pension and increase from time to time to beat inflation is denied in a meaningless manner.

03. Pension Fund is created out of the statutory contribution to EPF which was payable by banks pursuant to EPF and Miscellaneous Provisions Act, 1952,  prior to notification of Pension Regulations on 29 09 1995.  It is thus the deferred wages of the employees and not the money of banks.

04. To cite a simple example, Union Bank of India had a growth in Pension Fund to the tune of Rs.6,574.01 Crores during five years ending 31.03.2015.  It raised unlawful contribution to the tune of Rs.134.43 Crores into its Pension Fund from beneficiaries of Pension Fund on the basis of the Joint Note on Pension.  This is in derogation of regulation 5 (3) and 11 of Pension Regulations, which make the bank the sole contributor to Pension Fund.   The Bank can refund the amount with compound interest within an outlay of Rs.300.00 Crores.  Compound interest is payable since the money was earning such income by way of interest on Pension Fund investments to the bank / Pension Fund.  After paying this also there is a residue of Rs.6,204.01 Crores which can foot payment of arrears to all the 3,106 retired employees at Rs.2.02 Crores per capita. The actual arrears payable per capita would be in the range of Rs.15.00 to Rs.35.00 lakhs only.  Even after that the Pension Fund of the Bank will be resilient. Similar is the case with other banks also.

05. The annual growth in Pension Fund of the Bank is four times the amount now being paid as pension to all the pensioners.  The pay out of benefits was a mere 23.25 percent of the annual growth for 2014-15 and will be lesser in the following year. (Details being collected as it is not available in the Annual Report)

06. The Pension Fund has the sole purpose of paying pension/family pension and it cannot be utilized for any other purpose by operation of regulation 5 (2). The Pension Fund need not service employees recruited after 31.03.2010 who are covered by the   PFRDA Scheme.  Mortality of pensioners is reducing the pension liability.

07. The case with all other public sector banks is also similar.  All of them can foot two to three times the present pension to all their pensioners. It is stupendous stupidity of an astounding nature that public sector banks are flouting Pension Regulations and looting the retired senior citizens, their legitimate statutory entitlements, bringing shame to the democratic fabric of the nation, pushing the hapless bank pensioners into the netherworld.

08. Non-payment of the statutorily vested benefit is a serious crime and when government is also indulging in it, one fails to know what the independence of the nation and democracy means.   When the makers of law who are to administer them and have to be compliant with them are acting in derogation of them, it creates a catastrophe.  It is an insult to the Constitution by the Executive as they are not respecting the Legislature, which is the apex institution in a democracy.   When an employee who has served the bank for 15 to 30 years is deprived of his pension to the tune of Rs.15.00 lakhs to Rs.30.00 lakhs by the employer, what else needed to establish practice of bonded labour?

The derogations of the Pension Regulations and its bad implementations are as below:

A.   While Pension Scheme was implemented, options for pension were taken on the basis of draft Pension Regulations which did not contain the clause for forfeiture of past service for participation in strike.  There were only 28 Pension regulations in the draft regulations circulated.

B.   The Pension Regulations notified on 29.09.1995 contained 56 regulations, including a clause for forfeiture of entire past service for participation in strike under regulation 22 (4) (b). The clause was rigorous as it would deprive the employee opting for pension after surrendering his EPF contributions to the Pension Fund, Pension as also EPF if his past service is forfeited. It was discriminatory also as it would not affect the terminal benefit of one  who remains in CPF and take away the terminal benefit of one who opts for pension.

C.   The extraneous clause infused in the Regulations prompted employees who opted for pension to take exit and those who had not acted on the basis of the draft, not to join the Pension Scheme.  It kept about 6 lakhs of employees (nearly 70 percent) outside the purview of the Social Security Benefit of Pension. 

D.           After infusing the rigorous clause for forfeiture of past service,  Union Bank of India,  issued a circular letter 0n 29.12.1995 on a mere advice from Indian Banks’ Association permitting employees to revoke the option exercised prior to 29.09.1995, the date of notification of the regulations,  if they wanted to do so for any reason. But in terms of the draft regulation 4 (2) as also of the adopted regulation 4 (2), an option for pension, once exercised, was final and regulation 3 (9) of the Pension Regulations had deemed the earlier option to be an option for the purpose of the Regulations.  The Staff Circular through which the Regulations were published among employees on 26.10.1995 had also stated that those who had opted earlier need not opt again and that the option, once exercised was final and irrevocable. Having said this on 26.10.1995, all options had the effect of having been exercised on that date and no option for pension was revocable.  Yet the bank revoked the earlier options of many employees in derogation of regulation 4 (2), which was ultra vires since regulation was statutory and it remained intact.

E.           When the government later directed Indian Banks’ Associations vide communication F No.4/8/4/95-IR dated 24.12.1997 to delete the clause for forfeiture of past service from regulation 22 (4) (b) and to give effect to it, though banks amended the regulation, they did not carry out the government directive to give effect to it by extending the mandatory option for pension which was to be given in the wake of the radical change in offer terms of option.

F.            As an illustration of the non-compliance with the direction, it can be seen that Union Bank of India made the following on 2^nd January, 1999 and published in the gazette dated 27.02.1999 as infra.

(1)    These regulations may be called Union Bank of India (Employees') Pension (Amendment) Regulations, 1998.

(2)    They shall come into force on the date of their publication in the official Gazette

2.  In the Union Bank of India (Employees') Pension Regulations, 1995, for clause (b) of sub regulation 4 of regulation 22, the following clause be substituted, namely:-

"(b)    Nothing in clause (a) shall apply to interruption caused  by resignation, dismissal  or removal from service".

G.           The above amendment was invariably to be carried out with retrospective effect since the intention of the government directive was to extend a fresh option to those who could not opt earlier when the deleted clause was there in the regulations.  It was to have retrospective effect to serve the real purpose.  Since the same was carried out with prospective effect from the date of notification in gazette, it served no purpose at all and got confined to mere amendment of the regulation with no benefit to anyone.

H.           If the above amendment was given effect to, it would have resolved more than 90 percent of the problems in the implementation of the Regulations.  If the Union Bank had done it that time, it would have resulted in a huge Pension Fund at least to the tune of Rs.24,000 Crores in the place of the present Rs.7,732.57 Crores (Rs. 1,158.56 Crores plus growth of Rs.6,574.01 Crores in five years up to 31.03.2015). By not giving effect to the direction of the government, the bank spoiled about Rs.15,000.00 Crores to the detriment of the economy and the employees.  The amendment had no purpose and the entire work and time consumed at Parliament level for the process was a sheer waste.

I.             Not only that the amendment was not given effect to at the appropriate time, but it was clandestinely kept in camera and was advised to the beneficiaries after a dubious and disastrous delay of 43 months on 8^th October, 2002 only, that too without extending the option intended thereby.  Similar exercise was done at the behest of IBA in other banks too which also deceptively did not extend the option for pension to the employees.

J.            The option intended through the government direction was later given after a decade through a Joint Note dated 27.04.2010 only; on conditions that derogate the Pension Regulations which cannot have legal sanctity for reasons infra:-

a)         The Joint Note envisaged payment of 56 percent of EPF paid at the time of the retirement in the case of retired employees on its date and at 2.8 times pay for November, 2007 to Pension Fund of banks, in the case of employees who exercise option through it.  This contribution prejudice regulation 5 (3) and 11 which make the bank the sole contributor to the Pension Fund.

b)    The Joint Note prescribes payment of pension to the retired employees from 27.11.2009 which prejudices regulation 52 (1) that stipulates payment of pension from the date following the date of retirement to the employees.

c)    No one can be granted an option after 26.01.1996, since regulation 3 mandates exercising of option within 120 days  from the notified date of 29.09.1995 and regulation 3 is remaining intact. Pension paid out of Pension Fund to the beneficiaries of the Joint Note is misappropriation of Pension Fund Trust unless regulation 3 is amended with retrospective effect.

d)    The Joint Note is in the form of amending the Pension Regulations to which they relate, viz. regulation 5 (3), 11 and 52 (1).  The due procedure for amending the Pension Regulations through compliance with section 19 (4) of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 is stipulated as clause 10 of the Joint Note.  IBA was to forward a copy of the Joint Note together with  a copy of the Pension Scheme to the Government for its approval and further action for compliance with the due procedure in law.   In terms of section 19 (4) of the Act, it had to be done as soon as the amendment was framed on 27.04.2010.  But the due procedure is not yet done, albeit lapse of six years, making the Joint Note void and obliterated.

Clause 10 of Joint Note:

“The conclusions arrived and recorded in the above Clauses together with a copy of the Scheme of Pension will be forwarded to the Government by the IBA for their approval and further action in terms of Section 19 of The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 by complying with the procedure for amendment of the relevant Pension Regulations”

Sec.19 (4) of the Act, referred supra  in covenant 10 of the Joint Note :

“Every regulation shall, as soon as may be  after it is made under this Act by the Board of Directors of a corresponding new bank, be forwarded to  the Central Government and that Government shall cause a copy of the same to be laid before each House of the Parliament, while it is in session, for a period of thirty days which may be comprised in  one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or successive sessions aforesaid, both Houses agree in making any modification in the regulation or both Houses agree that the regulation should not be made, the regulation shall thereafter have effect only in such modified form or be of no effect, as the case may be; so however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that regulation.”

The Joint Note disqualifies itself from being laid in Parliament on account of the prejudicial covenants and cannot be laid “as soon as may be after it is made” forever now on account of the long span of time elapsed so far after its formation.

It is on the basis of the void Joint Note that the public sector banks denied pension to the retired employees for varying periods, say from one month to 10 years from the date or retirement to the arbitrary date of 27.11.2009, which was again irrational and discriminatory and levied an unlawful contribution to their Pension Funds. Public sector banks thus looted the retirement benefits of the employees who worked for them and for the nation.  

K.           Pension in banks was agreed to be exactly on the pattern of the Central Civil Pension.  The stipulation in regulation 56 on the caption Residuary Provisions is as infra:

“in case of doubt in the matter of application of these regulations, regard may be had to the corresponding provisions of Central Civil Service Rules, 1972 or Central Civil Services (Commutation of Pension) Rules, 1981 applicable to Central Government employees with such exemptions and modifications as the bank, with the previous sanction of central government, may from time to time, determine”. 

IBA, the representative body  / banks have not so far sought and obtained permission for any exemptions and modifications, it is limpidly in derogation of regulation 56 that updation of pension is denied so far to the bank pensioners for about 20 years of the inception of the Pension Scheme.

L.            Section 10 (7) of the Banking Companies (Acquisition and Transfer of Under-takings) Act, 1970/1980 permits the Board of a corresponding new bank (nationalized bank) to declare a dividend and to retain surplus profits as reserves in its books only after making due provision/payment to superannuation funds, inter alia, all establishment expenses.  Given that all public sector banks had been declaring and paying dividends to the government which is applied to part finance the payment of higher salaries and pension to the government employees, the process was akin to robbing Peter to pay to Paul which is against the Directive Principles of State Policy enshrined in the Constitution.

M.          Shri. P Chidambaram, Former Finance Minister who was mostly in control of MOF was reportedly announcing that the profits of banks are not paying wages to the employees which meant that it had other purposes like changing the logos of banks like Union Bank of India, Bank of Baroda, Canara Bank etc. in a stroke and awarding the work to a single firm viz. Boston Consultants in which his son Mr. Karthi Chidambaram had specific interest without knowing the legal position that salary and superannuation funds have a prior charge over the profits of banks.  When the present incumbent Shri.  Arun Jaitley and his Government that have given assurance to the electorate to remedy the evils done to the subjects by the predecessors are following suit while reasonable salary, pension and pension revision can be granted with no impact on the profits of banks and burden to the government, one has to make a loud cry “Save Bankers, Save India, Save Democracy, Save the Constitution”.

N.         The Public Sector Banks that allows the King Fisher in the Rajya Sabha to swoop into the banking pool and carry the treasures on its beak so easily remaining frugal in paying adequate compensation to the work force in the industry and creating a slave dynasty there is ironical.  The one time alluring industry that implements all financial policies of the government is now facing a talent drain as it is now the last choice of jobseekers.

O.           The utter lawlessness in governance and implementation of Pension Regulations can only bring shame to the great democratic nation and to its magnificent Constitution.  It tarnishes the very image of the government as there is huge influx of writ petitions from the victims which results in wastage of the precious time of the judiciary.

I feel that it will be a big step for restoration of fundamentals of democracy and of the magnificent Constitution of India if the statutorily vested benefits unlawfully detained by Public Sector Banks in the Country are caused to be released to the hapless bank retirees, mostly of whom are senior citizens in the age group of 60 to 80.  I therefore earnestly request to you kindly direct MOF, GOI to ensure compliance with the following Pension Regulations in letter and spirit so that the derogations are done away with:

                                 I.            Regulation 4 (2) - Options for pension, once exercised shall be “final”.

                               II.            Regulation 5 (3) & 11- The Bank shall ensure that sufficient sums are placed in Pension Fund to enable the Trustees to pay the benefits under the Regulations. This will facilitate repayment of the unlawful contributions and interest to the beneficiaries.

                             III.            Regulation 52 (1) – A pension other than family pension shall commence from the date following the date on which an employee retires.

                            IV.            Regulation 56 - In case of doubt, in the matter of application of these Regulations, regard may be had to the corresponding provisions of Central Civil Service 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.

(So far, no exceptions and modifications have been permitted by Government from the above . This makes it limpid that in terms of regulation 56, bank pension scheme ought to be on the same lines as of government pension scheme  and revision in Basic Pension with each Bipartite Settlement as in the case of Central Government Pension which is revised with implementation of each Pay Commission has to be there for bank pension.  If not, it is apparent breach of the regulation)

It was far away from my intentions to invoke the names of individuals, but the same had to be done for the purpose of proper statement of facts.  The purpose is only to present facts in their real perspective.   A mere compliance with the regulations above will resolve all issues in a stroke and relieve judiciary also substantially as a number of writ petitions will lose raison-d’etre.

With respectful regards,

Yours sincerely,

   C N VENUGOPALAN

   9447747994