Sunday, April 02, 2017


I bring to your kind attention the colossal injustice unknowingly done by MoF at the behest of IBA withholding the right to live of the senior citizens who retired from banks in India after participating in the process of nation building when the payment of their statutorily vested benefit can be given with zero cost either to banks or to the government.

After holding in the case of RBI Pension Regulations that any administrative order or instruction circumventing the provisions of Pension Regulations is unsustainable, MOF implemented in Public Sector Banks under its control, the Joint Note dated 27.04.2010 crafted by IBA, envisaging amendments to Bank (Employees’) Pension Regulations,1995 (“Pension Regulations” for short) framed pursuant to Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 ( “the Act” for short), overruling its regulations 5 (3), regulation 11, regulation 7 and regulation 52 (1)of Pension Regulations and in defiance of sections 19 of the Act.

IBA was instrumental to making MoF circumvent the Pension Regulations while permitting implementation of the Joint Note.  The breaches that have taken place through the Joint Note and its effects are as below:-

01.  In terms of regulation 3 of Pension Regulations, the last date for option for pension was 26.01.1996. Pension Funds of Public Sector Banks (“PSBs” for short) constituted pursuant to Pension Regulations have the sole purpose of paying pension/family pension in accordance with the Pension Regulations, 1995 (regulation 5.2). They cannot pay pension in accordance with the Joint Note which came into being on 27.04.2010.  All pension paid on the basis of the Joint Note from 27.11.2009 constitute misapplication of the Pension Fund of Public Sector Banks.

02.  Regulation 7 of Pension Regulations delineates the components of Pension Fund and excludes a contribution by the employee other than the initial transfer of his CPF with the employer to the Pension Fund.  The Pension Funds are not empowered to receive any other item than what are stipulated.  The Joint Note envisaged a contribution of 2.8 times pay for November, 2007 from employees on rolls and 56 percent of CPF from retired employees to the Pension Funds for giving them option for pension/pension. The contribution is unwarranted by the Pension Regulations in force and the administrative order for raising it is unsustainable.

03.  Regulation 52 (1) of Pension Regulation mandates payment of pension from the day following the date on which an employee retires. Clause 8 in the Joint Note which stipulated that pension to the retired employees who are allowed to opt shall be payable from 27.11.2009 only intercepted the statutory regulation. It deprived the retired employees who constitute similar manner of people of the pension for varying periods from the date of their retirement to the arbitrary date of 27.11.2009.  Pension is “property” within the meaning assigned to it by Article 300 A of the constitution and it cannot be deprived save by law as held by Courts.  The Joint Note was thus infringing the magnificent Constitution of India, besides the Pension Regulations.

04.  The Joint Note was to be laid in the Houses of the Parliament for a period of 30 days “as soon may be after it was made” for the nod of both the Houses in compliance with the due procedure of amending the relative pension regulations pursuant to section 19 (4) of the Act.  The due procedure in law to be done some time in the year 2010 is remaining undone for past seven years, making it beyond any conundrum that it has no force of law.  The requirement under section 19 of the Act spelt out as conclusion 10 of the Joint Note is breached, the Pension Regulations notified on 29.09.1995 are remaining the same and the Joint Note is invalid.

05.  The Joint Note stipulated refund of the CPF paid on retirement and a further contribution of 56 percent of it in the case of retired employees to the Pension Fund of banks to give them option for pension/pension.  When 56 percent of CPF paid on retirement was collected back, presumably by way of interest for the period the CPF was remaining with the retired employee,  the benefit in lieu of CPF shall invariably flow from the date of retirement (date of release of CPF) and not from the date 27.11.2009 stipulated in the Joint Note.  The conclusion in clause 8 of the Joint Note to pay pension to all the retired alike from 27.11.2009 was preposterous, discriminatory and irrational, besides being opposed to regulation 52 (1) which mandates payment of pension from the day following the date of retirement.

06.  The disastrous effect of the Joint Note is that it has given rise to a huge influx of writ petitions in various High Courts across the nation that are saddled with piles of petitions which are resisted by the Public Sector Banks at the cost of public money.  It is opposed to the National Litigation Policy which condemns litigation for the sale of litigation and eschews “let the Court decide” attitude.  What is more perturbing is that the victims are the hapless senior citizens in the evening of their lives who deserve empathy and care of the government.

07.  The gross injustice is perpetrated by a handful of bank chiefs who are members and office bearers of the boo-boo IBA that crafted the Joint Note when due pension as defined by the statutory Pension Regulations can be paid with no cost either to the banks or to the government as pension is payable out of Pension Funds and Pension Funds are abounding in the case of all PSBs. The annual payout is below 25 percent of the annual growth of Pension Fund in the case of majority of banks and all banks can afford to pay two to four times the present pension to all their pensioners with zero expenditure to them. The government also does not have to make any budgetary allocation for it.  Pension scheme being a substitution of the CPF Scheme and Pension Funds having been  built up of contributions which banks were previously to make to CPF pursuant to EPF & Miscellaneous Provisions Act, 1952, it comprises of the deferred wages of employees. It is not the money of banks at any rate.  It has the sole purpose of paying pension and cannot be applied for any purpose.  Besides, as Pension Funds need not service employees who are recruited after 31.03.2010 who are covered by PFRDA Scheme, a growing Pension Fund without paying due benefits is meaningless.

08.  MoF had, in fact, estoppels from according sanction for implementing the Joint Note as per its own stand adopted in the case of RBI Pension Regulations after consulting Law Ministry which was as infra:-

Ministry of Law was consulted on this issue has opined that

The employees of RBI, which is a statutory body cannot be equated with the employees of the Central Government, in respect of pension because pension of RBI employees is governed by the Regulations framed under the RBI Act.

As the pension regulations are framed in exercise of statutory powers under the RBI Act, these are statutory regulations.  Any deviation/amendment of the provisions of these pension regulations without formally amending it after following the procedure prescribed by the RBI Act will not be permissible under the law.  No deviation / amendment of pension regulations can be made by administrative orders / instructions.”

Any administrative order or instruction which circumvent the provisions of the Regulations is unsustainable.   Further, the Regulations have the precedence over the Administrative Orders / Instructions.”

(Source: Letter F No. 16/1/58/2008-IR dated 23.10.2009 to Mr. Arvind Ganesh Karnik and two others on its page 8)

09.  Since the makers of the law by themselves breaching them is adultery, I request that MoF may kindly be advised to open up its eyes and to make the PSBs under its control compliant with the Pension Regulations in force by releasing the pension from the date of retirement to 27.11.2009 and refunding the unlawful contributions raised to Pension Funds together with interest at compounding rate with zero cost to Pension Funds as the amounts had been earning similar interest on Pension Fund investments for banks.
Thanking You,
Yours faithfully,

The details of pension fund of Union Bank of India, a PSB attesting the position that it can pay four times the present pension to all its pensioners and has growth in five years enough to pay arrears of pension to the tune of Rs.2.12 Crores to each pensioner who was given coverage of pension through the Joint Note.  Similar is the case with all PSBs and all can afford to pay two to four times pension to all with no cost either to bank or to government.

Pension Fund of Union Bank of India
And its growth during five years ending 31.03.2015
Amounts in Rs. Crores
Year-wise Particulars
Opening balance  of Pension Fund
156 % of CPF collected from retired employees

2.8 times of pay collected from employees

Annual Contribution to Pension Fund
Income from investments
Contribution + Income from Investment 
Pension Benefits paid
Pension Fund Balance
Incremental Growth of Pension Fund
Incremental growth for five years
Retired employees  who joined Pension Fund in 2010
Amount available per capita for payment of arrears of pension to 3,106 retired employees
Amount of arrears payable per capita to 3,106 employees
0.20 to 0.35

1.    Pension Fund had growth of Rs.6,574.01 Crores during five years ending 31st March, 2015
2.    There are 3,106 retired employees who are taken into pension scheme in 2010 to whom pension is denied from date of retirement to 26.11.2009 on the basis of the void Joint Note.
3.    Rs.6,574.01 Crores is available in the growth for five years for payment of arrears of pension denied through the Joint Note which can meet the payment to the tune of Rs.2.12 Crores per capita to all of them.
4.    Amount of arrears payable to each pensioner  Rs.20.00 to Rs.35.00 lakhs
5.    Since pension / arrears is payable out of specific fund viz. Pension Fund the payment does not affect the Profits of the bank and brings in zero expenditure to the bank.
6.    Since Pension Fund is built up with the contribution which was previously payable by bank to EPF pursuant to EPF and Miscellaneous Provisions Act, 1952, it is the deferred wages of employees and not the money of the Bank.

7.    The sole purpose of the Fund is payment of Pension/Family Pension (Regulation 5.2).

8.    Employees recruited after 31.03.2010 need not be serviced out of Pension Fund as they are covered by PFRDA Scheme.  Mortality of pensioners too is reducing Pension Liability.

9.    Payment of benefits during three years ending 31.03.2013, 31.03.2014 and 31.03.2015 is a meager 23.33 %, 24.49 % and 23.25 % of the annual accretion for years indicating that the Bank can pay four times the present pension to all the 17,579 pensioners as on 31.03.2015.

 Source Information taken from Bank pursuant to RTI Act, 2005 – Information supplied by Bank contains slight error pertaining to the position on 31.03.2011 which is not much material
 (letter addressed to the Prime Minister)