C N Venugopalan

Ex-Manager,Union Bank of India
"Nandanam",
Kesari Junction,
North Paravoor,
Kerala - 683 513
Phone: 91 484 2447994 Mob:919447747994 E-Mail: ceeyenvee@gmail.com
No.100815 15th August,

Hon'ble Minister For Finance,

Government of India,

Ministry of Finance,

New Delhi-110 001

Through: Department of Economic Affairs, Banking Division

Respected Sir,

Sub: Amazing Profits & Alleged Poverty for betraying Senior Citizens

Ref: Pension Pact dated 27th April, 2010 signed in Banking Industry

I take the privilege of addressing this communication respected fully to you unveil some fundamental issues that infringes the provisions of the Indian Constitution by the forward looking voluntary organization of banks in India viz. Indian Banks Association (IBA) which go to undermine the prestige of the UPA Government in India by tarnishing the very image of it..
Through the Pension Pact signed for Bank Employees on 27th April, 2010, Indian Banks Association has once again inflicted gross injustice upon retired and working bank employees for ever. In the process of rectifying the anomaly of denying Pension to the retired and Pension coverage to those in service who are deprived of the benefit, fresh set of anomalies and illegalities have been implanted in the document calculated at looting pensioners who are senior citizens. Pension Regulations have been one and the same as on 27th April, 2010 but entirely different modalities have been adopted in respect of different sets of beneficiaries discriminating the beneficiaries of the pact on the pretext of paucity of funds for operating the scheme making the pact an illegal one entirely. When those who already have coverage under the scheme are not subjected to any levy, fresh entrants to Pension Scheme have to make hefty contributions and forbearances as below:
Employees on rolls as on the date of the Pact have to pay 2.8 times their revised Basic pay of November, 2008 for gaining entry in the scheme
Retired employees (retired prior to April, 2010) will have to pay back 156 percent of CPF and interest paid to them when retired. At the time of inception of the Pension Scheme in 1995, all the retirees from 01 01 1986 were encompassed under it taking back from the CPF paid on retirement together with simple interest at the rate of six percent. This precedence makes the anomaly a glaring one.
Pension is payable under the Pact only from 27th November, 2009 and not from the date of retirement to fresh entrants which is a strange situation. . Those retired in earlier years, say from 2000- 2001 will have to forgo their pension up to this arbitrary date. When their counterparts who were in pension segment while retiring are paid pension from the date of retirement under the same Pension Regulations.
Commutation of Pension takes into account the age factor as on date of fresh option for new entrants whereas age on date of actual retirement is material and it has been considered in all other cases. An employee retired in 2000 who was to receive Rs.4.00 lakhs as commutation on retirement would now get a sum of Rs.3.00 lakhs to Rs.3.50 lakhs when age as on date of fresh option is reckoned. Considering the interest factor also, the employee will have Rs.3.00 akhs to.3.50 lakhs in lieu of Rs.10.00 lakhs. Besides, the date of restoration of full pension will be extended unduly to another 10 years.
Resigned employees (who were not allowed to retire under VRS) are not at all considered for Pension though they do have the qualifying service vesting with Pension. Qualifying service and not the mode of exit shall be the criterion for Pension and the untoward situation arose on account of the lapse in application of mind while copying down modalities from somewhere while drafting the original Pension Scheme. While banks pay Pension to the special VRS retirees who were given incentive package too, denial of Pension to the resigned would constitute a gross irregularity.
The retirees in the third category above who are Senior Citizens will have to pay back Rs.2.00 lakhs to Rs.16.00 lakhs for getting their otherwise legally vested and subsisting benefit. For instance one who retired in 2000 will have to forego monthly Pension of Rs.10,000/- to Rs.12,000/- which works out to Rs.10.00 lakhs to Rs.16.00 lakhs with interest factor too. One who retired in March 2010 will have to pay back Rs.10.00 lakhs to Rs.16.00 lakhs whereas one who retires after another month, say on 30th April 2010, will have to pay just Rs.1.00 lakh to Rs.1.50 lakh (2.8 times Pay for November, 2007) as he falls in the first category . The huge differential makes the Pension Pact fundamentally illogical and senseless. IBA and United Forum of Bank Unions, after protracted discussions that lasted for about 30 months, concluded the most irrational and discriminatory Pact and placed it for approval without considering the great shame the sanctioning authority viz. MOF, GOI would be put to in approving it. Government nod, if any, for such a pact vitiated by gross indiscrimination and flouting natural justice, substantive law and principles of equality is as good as (or as bad as) breaking one of the twenty-four spokes of the Ashoka Chakra. The attempt of IBA and Banks to make tolls from the 60000+ retirees by alleging paucity of funds is nothing less than a day light robbery, well planned and deceptive to rob the senior citizens retired from banks in India. They have already done the heinous crime of putting the retired senior citizens on crossroads for more than a decade, denying them the right to live. It is shameful to the banking system and to the Great Nation.
When we make a glance at the profits made by PSBs for the year ending March, 2010, it brings home to any one that the alleged paucity of funds and lack of paying capacity are merely illusion. The figures of net profits earned by Public Sector Banks in India are furnished below for establishing the said fact:
Total Profits and Incremental Profits of Public Sector Banks in India
Rs. Crores
Name of Bank 31 03 2010 31 03 2009 Incremental Profits Decrease in profits
Allahabad Bank 1,206.33 768.60 437.73 -----
Andhra Bank 1,045.85 653.05 392.80 -----
Bank of India 1,741.07 3,007.35 ------ -1,266.28
Bank of Maharashtra 439.57 375.17 64.40 -----
Bank of Baroda 3,058.33 2,227.20 831.13 -----
Canara Bank 3,021.43 2,072.42 949.01 -------
Corporation Bank 1,170.25 892.77 277.48 ---
Central Bank 1,058.23 571.24 486.99
Dena Bank 511.25 422.66 88.59
Indian Bank 1,554.99 1,245.32 309.67
Indian Overseas 706.96 1,325.79 --- -618.83
Oriental Bank 1,134.68 905.42 229.26
Punjab National 3,905.35 3,090.88 814.47
Punjab & Sind 508.80 431.18 77.62
Syndicate Bank 813.32 912.82 --- -99.50
United Bank 322.36 184.71 137.65
Union Bank 2,074.92 1,726.55 348.37
UCO Bank 1,012.18 557.72 454.46
Vijaya Bank 507.29 262.48 244.81
Sub-Total 25,793.16 21,633.33 6,144.44 -1,984.61
State Bank of Hyderabad 822.71 615.81 206.90
State Bank of Mysore 445.77 336.91 108.86
State Bank of Indore 113.95 103.29 10.66
SB Bikanir & Jaipur 455.16 403.45 51.71
State Bank of Patiala 345.23 285.89 59.34
State Bank of Travancore 684.27 607.84 76.43
Sub-Total 2867.09 2353.19 513.90
State Bank of India 9,166.05 9,121.24 44.81
Grand Total 37,826.30 33,107.76 6,703.15 -1,984.61

Public Sector Banks other than Bank of India, IOB and Syndicate Bank made incremental profits of Rs. 6,703.15 Crores during the year ended 1st March, 2010. The reason for minus figures in three banks to the tune of Rs.1,984.61 Crores can be of a temporary nature as there can be no valid reason in the light of progressive profits in all other banks. All the PSBs taken together made Net Profits of Rs.37,781.49 Crores. The entire Pension arrears of all the retired employees can be within Rs.5,000/- to Rs.6,000/- Crores, which can well be contained within just two months' profits of the PSBs or within the incremental profits for just one year. When one compares it with the Rs.70,000 Crores spent on Agricultural Debt Relief the erstwhile UPA Government extended to borrowers at the fag end of its tenure, this is only a pea nut for the banking system and to the present Government. The attempt to raise tolls out of Pension payable to the retired is analogical to robbing Peter to pay Paul and a heinous crime as the victims are senior citizens. It is discriminatory and unconstitutional. Granting Pension with arrears to the retired and doing away with the penalties is the only way as a corrigendum measure in compliance with requirements of substantive law and it alone can earn for the present government allegiance of about six to seven lakhs members from the banking community and their families.
As per terms of the Pension Regulations banks have to contribute 10 percent of the Pay and allowances ranking for Superannuation benefits in respect of all employees who are on rolls now in Pension segment ( and till date of retirement in the case of retired) for funding Pension. Before attempting to impose levies on the fresh beneficiaries through the recoveries envisaged under Pension Pact, IBA should be made to give a confirmation that the member banks have made adequate contribution to Pension Funds by way of the 10 percent of Pay and Allowances. . This is all the more necessary since Pension is a benefit extended in lieu of CPF and banks were otherwise under an obligation to make this contribution to the CPF of those who joined the Pension Scheme. The Regulations do not contain an enabling provision for a contribution from the employees. Before attempting to stretch hands to reach out the bowls of the employees and the retired senior citizens who find it difficult to make both ends meet, this exercise is inevitable. IBA should build up enough dignity to conduct a self audit and find out justification for the levy. Actuarial exercise conducted in 2008 brought to light a deficit of Rs.6,000 Crores only in Pension Fund for fresh option and IBA, through the proposed recoveries, targets more than double the amount. Though India became independent and British tyrants got exiled more than six decades back, they appear as reincarnated in the bureaucratic banking tyrants who perform a cheap exercise for their own cosmetics through deception of the people who worked for them. Gallons of water that had flowed through Ganga after independence could not cleanse their evils and the Holy water is getting contaminated even as we are celebrating the 63rd anniversary of Independence.
Fresh Option for pension is not at all a new benefit given. It is a subsisting right of the bank employees which has been taken away by banks through illegal means. The initial offer of option was made in 1995, keeping in the Regulations the severe clause providing for forfeiture of entire past services of an employee in case he participated in a strike any time forcing employees to stay away from the Scheme. And when this draconian provision was deleted in 1999, banks did not carry out the legal obligation of extending fresh option to those who were forced to stayed away on account of the presence of the deleted clause in the Regulations while calling for options. This was clear violation of simple fundamental law by banks that function entirely on the premises of substantive law and public trust. They kept the information in camera for about 43 months and published it afterwards in a casual manner without clearly informing the target group. Moreover, in the case of many, banks revoked the options which were "final and irrevocable" as spelt out clearly in the Government sanctioned Regulations, at the behest of IBA albeit want of a provision for revocation of an exercised option anywhere in the Regulations. This is blunt and blatant supersession of the authority of the Government by banks and IBA which is a mere voluntary organisation of the Banks. IBA may please be called upon to consult some legal experts about this if their officials lack enough potential to understand legal nitty-gritty on their own and to inform the correct position to Government.
Former Supreme Court Justice Shri. V R Krishna Iyer, one of the greatest luminaries in jurisprudence who studied the subject and the penal provisions of the Pension Pact had addressed a communication to you on 24 06 2010 in your personal address, enclosing therewith my letter addressed to him. The status of the communication and the action taken on it are yet to be known. The Prime Minister's office had forwarded to your office two letters - one about the flaws in Pension Pact and the other about the contributions I made to the Banking System - with their direction to do the needful. The PMO reference numbers are ID 9 3 2010 PMP 4 164953 and 163954 dated 02 June, 2010. The statusof these letters are not intimated so far. I had sent a letter bearing No.20100619 to the present Chairman of IBA on 19 06 2010 requesting him to review the Pension Pact and to remove all discrepancies especially as it is a one time opportunity to rectify the whole anomalies. Though the scheme is not founded on any principles and causes heart burn to all the retired, the eminent banker appears to be in a hiccough mode without uttering a word on it.
The recently concluded wage pact also was not employee friendly and gave a hike of 17.5 percent to the six days (and beyond) working bank employees while Pay Commissin extended 40 percent hike to the five days working Government employees. The South based small Dhanalaxmi Bank Ltd, gave its employees a hike of 30 to 50 percent in wages ahead of the wage pact IBA and UFBU settled for the potent state owned banks and for the other banks. It is enigmatic how Dhanalxmi Bank could do so when it is also a member of the IBA. Bank of Baroda was keen to give a better pay pack for their staff, which IBA resisted. This shows the potentials and possibilities of the individual banks and IBA should learn from them much. IBA and banks are earnest in making the system more sound and to increase profits and productivity, instead of sowing the seeds of resentment and making the workforce fret and fume, they should garner good industrial relations through adequate compensation for labour. Merger of associate banks with SBI, merger of small PSBs with majors like PNB, BOB, BOI, UBI, Canara Bank etc. will help the industry for doubling the profits from current levels and banks will not have constraints for meeting the current and future Pension obligations. It will reduce establishment expenses considerably and make robust national banks by facilitating the following:
Expenditure on publicity and advertising (which, reportedly carries kick backs also with it) can be saved in respect of 13 PSBs and 6 Associates which will net in huge amounts as profits
Expenditure on IT spent by all the banks will come down substantially
Expenditure on audit of the banks that are merged.
A lot of administrative offices can be closed down and the man power can be utilised at filed level for increasing productivity. The Hindi Offices working in all the 20 banks for merely translating the circulars and documents can be deployed for productive purposes.
Multiple branches in particular towns and cities can be shut down depending on requirements and the staff can be redeployed and other establishment expenses can be saved.
The key positions can be reduced substantially which will result in excellent savings. Their TA and DA and Hotel Expenses (which reportedly have kick backs in the form of cash discounts) will come down.
Board meeting expenses in all the twenty banks will be reduced to 25 percent for the industry.
A number of Directors, especially two each in all PSBs and Associate Banks who have remained mute spectators without performing their role of acting as spokesmen of the people whom they represented when their legally vested rights were taken away can be eliminated, which will save much money that is now being wasted.
Merger has been just shown as a better option than reaching out the bowls of the workforce for increasing profitability and is optional for MOF and IBA to examine. If MOF has any interest, it can ask IBA to take a survey of the expenditure on the above items in all the banks and make appropriate recommendations to Government.
I propose to publish this letter, which is can become a writing on the wall for IBA, in various portals and websites of interest to bank employees as it can percolate into the banking horizon with the sole intention that when the Government calibrates appropriate corrective steps for infusing righteousness, it will be appreciated by the entire banking community of India numbering about ten lakhs and their families, infusing a loyalty to it in them.
I earnestly request you to please direct IBA to review the Pension Pact that aims to harass the retired senior citizens and widows of deceased bank men (who will have to shell out huge money for getting a meager family pension) expeditiously and to eliminate the irregularities so that the already subsisting right of the bank employees to get fresh option without any illegal contribution or levy or recovery is redeemed to them for meeting with natural justice. The letter is sent in duplicate for avoiding delay in taking a copy for sending it to IBA from your office. It is my humble request that IBA may be directed to examine the matters closely and to point of any difference in opinion and to send me a copy of the reply they give to MOF for my information.
I further make a specific request to please make arrangements for acknowledging this letter or to mark a copy of the forwarding letter to IBA as it will help me avoid the trouble of making an application under RTI ACT, 2005 for knowing its status
Thanking You,
Yours faithfully,

C N Venugopalan
cc.to:. Indian Banks Association, Mumbai