Indian Banks Association crafted a
Joint Note dated 27.04.2010 and got it signed by the national Level unions of
employees/ associations of officers in banking industry for the purpose of
allowing options for Pension Scheme to the left over employees in banks who
could not opt for pension earlier when the Pension Regulations contained a
clause for forfeiture of past services under regulation 22 (4) (b) and allowed
options in the year 2010.
01. In
Union Bank of India, 3,106 retired employees and 14,473 employees on rolls were
brought within the fold of Pension Scheme by allowing them to exercise options
on or before 31.10.2010 in terms of the Joint Note and pension paid to the
retired from 27.11.2009 and to others from the dates of their retirement.
02. The
last date for option in terms of the Pension Regulations notified on 29.09.1995
was 26.01.1996, (i.e. within 120 days of the notification) and regulation 3 in
force does not empower the Bank to accept option from any employee/family of
deceased employee after this date and to pay pension out of the Pension Funds
created pursuant to the Pension Regulations.
03. All amounts paid as pension from 27.11.2009 to
the retired including subsequent retirees out of the Pension Fund created
pursuant to Pension Regulations constitute unlawful /unauthorized payments
since the Pension Fund has provision to pay pension in accordance with the
Pension Regulations only vide regulation 5 (2) of Pension Regulations and
regulation 3 prohibits option after 26.01.1996.
04. Unless
regulation 3 is amended suitably by extending the last date of option to 31.10.2010,
the date fixed by the Bank in terms of the Joint Note or the options taken on
the basis of the Joint Note are declared as options for the purpose of the
Pension Regulations, the lacunae permeated will continue and the pension paid
on the basis of the Joint Note out of Pension Funds on the basis of the Joint
Note will remain unauthenticated.
05. MOF
permitted implementation of the Joint Note without amending the Pension Regulations
by placing it for in each House of the Parliament for 30 days for obtaining their
nod as soon as it was made on 27.04.2010. This was unwarranted as the document
envisaged amendment to Pension Regulations and section 19 (4) of the Banking
Companies (Acquisition & Transfer of Undertakings) Act, 1970/1980 mandates
such compliance. MOF was usurping the
authority of the Legislature in doing so, destroying the equilibrium in the
exercise of authority by the organs of democracy.
06. MOF
had in relation to RBI Pension Regulations in the context of writ petition No. 710/2009
of Bombay High Court ( Aravind Ganesh Karnik and Ors Vs. RBI and Union of
India) issued a communication viz. F
No.16/1/58/2008/IR dated 23.10.2009 after consulting Law Ministry as infra:
Item
No.5.1
“As pension Regulations are framed in
exercise of statutory powers under RBI Act, these are statutory regulations.
Any deviation/amendment of the provisions of the pension regulations without
formally amending it after following the procedure prescribed under the RBI Act
will not be permissible under the law.
No deviation/amendment of pension regulations can be made by
administrative orders/instructions”
Item 5.4
“Any administrative order or
instruction, which circumvents the provisions of the Regulations is
unsustainable. Further, Regulations have
precedence over the administrative orders/instructions.
07. It
is strange that before the ink in the above communication dated 23.09.2009 got
dried up, MOF issued its administrative order in July/ August, 2010 according
permission to implement the Joint Note in Public Sector Banks without amending
the Bank Employees’ Pension Regulations.
08. The
conclusions in the Joint Note prejudice what is done earlier under the relative
regulations making it unfit to be laid in the Houses of the Parliament for
amending the Pension Regulations especially in relation to regulation 52 (1), 5
(3), 7 and 11 as infra as mandated by section 19 (1) and (4) of the Banking
Companies (Acquisition & Transfer of Undertakings) Act, 1970/1980 :
a)
Regulation 52 (1) mandates payment of
pension from the day following the date of retirement whereas Joint Note
stipulate such payment from 27.11.2009, overruling the statutory regulation.
b)
Regulation 5 (3) and 11 fixes the
Banks as sole contributor to Pension Fund whereas Joint Note seeks to raise a
contribution from the employee/retired employee to Pension Fund.
c)
Regulation 7 delineates the various
components of Pension Fund which excludes a contribution by the employee that
finds a place in the Joint Note.
Note: Though the Bank appear as
contributor to Pension Fund, the real contributor is the employee himself as
the contributions are his deferred wages, which banks were to pay previously as
EPF contribution pursuant to EPF & Misc. Provisions Act, 1952
09. It
is also pertinent to state in this context that MOF on identifying that Bank
Employees’ Pension Regulations was agreed to be on the premises of RBI Pension
Regulations MOF had directed IBA vide communication F No. 4/8/4/95-IR dated
24.12.1997 to advise member banks to delete the forfeiture of service clause
from regulation 22 (4) (b) and to give effect to it, the bank disregarded the
direction of MOF and did not give effect to it by giving the mandatory option
in the wake of the radical change in the terms of offer of Pension Scheme but
merely amended the regulation, defeating its very purpose. The amendment carried out in Union Bank of
India was published among the target group only on 8th October,
2002, i.e. after 57 months of the MOF direction, that too without calling for
options afresh then. The option MOF
intended to be given through its communication dated 24.12.1997 was the one
given through the Joint Note on illegal and irrational terms.
10. In
the case of Union Bank of India, the Pension Fund has grown by Rs. 6,574.01
Crores during five years from 31.03.2011, The
Bank levied unlawful contributions to the tune of Rs.134.33 Crores ( Rs. 63.25 Crores by way of 56 percent of
CPF paid on retirement from 3,106 retired employees and Rs.71.08 Crores by way
of 2.8 times pay for November, 2007 from 14,473 employees on rolls) which can
be repaid with compound interest within a maximum sum of Rs.300.00 Crores. The
residue after footing the repayment is to the tune of Rs.6,274.01 Crores which
can foot payment of arrears of pension to all the 3,106 employees to the tune
of Rs.2.02 Crores per capita. The
actual arrears per employee payable would be less than 30 percent of the
available amount. The annual pay out of
benefits from the Pension Fund is less than 25 percent and the Pension
Fund can pay four times the present
pension to all their pensioners with zero cost to it and to the government as
pension is payable out of Pension Funds.
11. The position relating to other banks is also
similar and all banks can pay two to four times the present pension to all
their pensioners. But IBA continues to
project a totally distorted picture of fund fielding constraints to pay
pension/revision, ignoring the statutory obligation of banks to pay it.
12. Non-payment
and detention of the benefits is an offence to the pension statute, more so as
Pension Fund is the deferred wages and money of the employees.
13. IBA
conveniently ignored all along that employees of Public Sector Banks are
government employees as such banks are owned and run by the government and they
are the people who translate all financial of the government into reality.
Though they are to be paid out of the exchequer, the government does not have
to pay them their wages and gratuity as they are appropriated against the
income they generate in banks. Though
Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970/1980
guaranteed them fair wages and superannuation benefits under section 10 (7) by
permitting banks to declare a dividend and retain surplus profits as reserves
only after meeting such expenses, IBA torpedoed the Act by depriving the
statutorily payable wages and pension for reasons best known to it. The Bank employee who breaks his bones,
working six days a week in a hectic mode from dawn to dusk is paid Rs.30 K to
Rs.40 K lesser than similarly placed government employees who leisurely works
for five days a week.
14. Indian
Banks’ Association, the architect of the Joint Note has proved itself beyond
any doubt that it is totally unfit to frame regulations that are rational and
have locus standi in terms of the
substantive law. In the name of making
such bad wage pacts, this unregistered organisation siphons several crores of
rupees from PSBs with the connivance of the key men of member banks when the
entire process can be carried out in an impartial and unbiased manner by
appointing a Pay Commission for Banks.
In case data on public money that has flown into the kitty of IBA for
past ten years is collected, it can be seen that it is manifold the amount
needed for engaging a Pay Commission for banks.
The
Joint Note created turmoil in the country resulting in huge influx of writ
petitions in the various High Courts across the country adding to the piles of
petitions in courts, wasting the precious time of the judiciary and making
public sector banks defend the petitions against the senior citizens at the cost
of public money. The action of IBA is
disdainful as it is opposed to the National Litigation Policy which seeks to
eschew “litigation for the sake of litigation” and “et the court decide”
attitude.
By
addressing this letter simultaneously to the Chairman IBA and to the CMD of
Union Bank of India, I am requesting them to submit to the Hon’ble Ministers
and the Member of Parliament if they have anything to refute its contents or to
do the needful forthwith to take corrigendum measures forthwith to correct the
mistakes done through the Joint Note that has no force of law, under intimation
to me. A request to the Hon’ble Prime
Minister and to the Hon’ble Minister for Finance as also Law and Justice is
also made to scan the anomalies, reach a consensus and do the appropriate so as
to redeem righteousness in the matter at the earliest.
(Addressed to GOI, IBA,Chairman,UCO Bank and Shri MB Rajesh, MP)