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S. Ramachandran  

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We reproduce hereunder the letter from S Ramachandran addressed to Secretary, DFS, which gives point wise rejoinder to the points listed in the Record Note relating to retirees issues in the 10th BPS.  The affected retire must share it with other retired bankers and may give their suggestions in the comments column :-



S. Ramachandran                                                                               Kunal Icon, Building -A8

Former General Manager, Bank of Baroda,                                      Flat No. 104, Pimple Saudagar,

Former Chairman & CEO, The Sangli Bank Ltd.                             Aundh Camp, Pune – 411027,

(Now merged with ICICI Bank Ltd)                                                 Tel: 020 27201012.

Former Administrator, Madhavapura Mercantile                             E-mail id: 

Co-Op Bank Ltd ( Ahmedabad )

Former Director General, Maratha Chamber of

Commerce & Agriculture, Pune.                  




                                                                                                   Date :28thMAY’2015



 Shri Hasmukh Adhia,                                                              

Secretary, Departmental of Financial Services,                                  

Ministry of Finance, Jeevan Deep Building,                                          

3rd Floor, 10, Parliament Street,                                                            

New Delhi -100001.                                                                                





This is in reference to the Record  note  of discussion between Indian Bank’s Association and United Forum of Bank Union on the issue   and demands relating to retirees of Bank’s held on 25th May, 2015 at Mumbai.  On the face of it, it is quite evident that the record note has been prepared as an afterthought only with a view to show that the UFBU has taken up the issues of retirees with  all seriousness. However, the record note reveals very distinctly the cover up operation   and the nexus between the two parties in belying the long standing demands of retirees.  I have furnished hereunder my considered views on various averments of the record note:





IBA maintained that any demands of retirees can be examined only as a welfare measure as contractual relationship does not exist between banks and retirees. The periodic wage revision exercise based on mandate from member banks cover only wages and service conditions of serving employees. Retirement benefits are based on service conditions prevailing at the time of retirement of an employee and these do not change with settlement.

At the outset, it is unfortunate that the Bankers who are represented in the Personnel committee of IBA are making such prefatorial  statements in the Joint Note 2  without understanding its implications  and  without questioning the wisdom of officials of IBA who have framed these opening remarks. Worse still is the uncontested manner in which the UFBU “leadership” has accepted these prefatorial remarks without even recording their views on it. Besides indicating their bankruptcy of mind, it also shows degree of collusion between the parties to the joint note 2.  Now I proceed to give my detailed observations  as under:


 1.            I strongly object to the usage of the word “Welfare measure” for Pension and Pension related issue. The world over, Pension and its related issues are considered as “Social security measure” and not as a “Welfare measure” which has the connotation of giving some benefits out of gratis, charities or a public aid. We the pensioners are not beggars to seek alms from IBA.  Please visit any site on Pension including the PFRDA  and Government of India site,   or read any judgment of Supreme court, you will see that Pension is considered  a social security measure and not as a welfare measure and when you consider  it as a social security measure, it encompass the whole “life” and not restricted to the age of retirement.  They are also called as retirement benefits and superannuation benefits and encompasses  provident fund, gratuity and pension scheme.  Pension Scheme in particular is in the  form of guaranteed life annuity thus insuring against the risk of longevity and inflation.


 2.            We may in this connection point out that the antiquated notion of pension being a bounty a gratuitous payment depending upon the sweet will or grace of the employer not claimable as a right and, therefore, no right to pension can be enforced through Court has been swept under the carpet by the decision of the Constitution Bench in Deoki Nandan Prasad v. State of Bihar & Ors. (1) where-in the Supreme Court authoritatively ruled that pension is a right and the payment of it does not depend upon the discretion of the Government but is governed by the rules and a Government servant coming within those rules is entitled to claim pension.


 3.            Summing up the judgment in the case of S.P.Gupta  Vs Union of India, the Supreme court stated that :


“ it can be said with confidence that pension is not only compensation for loyal service rendered in the past, but pension also has a broader significance, in that it is a measure of socio-economic justice which inheres economic security in the fall of life when physical and mental prowess is ebbing corresponding to aging process and therefore, one is required to fall back on savings. One such saving in kind is when you gave your best in the hey-day of life to your employer, in days of invalidity, economic security by way of periodical payment is assured. The term has been judicially defined as a stated allowance or stipend made in consideration of past service or a surrender of rights or emoluments to one retired from service. Thus the pension payable to a Government employee is earned by rendering long and efficient service and therefore can be said to be a deferred portion of the compensation  for service rendered. In one sentence one can say that the most practical raison d'etre for pension is the inability to provide for oneself due to old age. One may live and avoid unemployment but not senility and penury if there is nothing to fall back upon.


 4.            Further, in the case of  M.R.Prabhakar & Ors. vs Canara Bank & Ors. on 3 October, 2012 ( (2012) 9 SCC 971),  it has been clearly enunciated that voluntary retirement maintains the relationship for the purposes of grant of retiral benefits, in view of the past service. On account of maintaining the relationship for the purposes of retiral benefits, second option to retirees was given. Moreover, in the relationship is between the banks and retirees, the IBA and constituents’ of UFBU are privy to the relationship between the parties and they have no locus standi to say that there is no contractual relationship between banks and retirees. On account of such contractual relationship, monthly pension is being paid to retirees. Retirees demands are not welfare measures, they are made as per the existing regulations. Payment of pension is not welfare measure, it is for the past work done to the organization/country. In Nakara case, it has been held that Pension is their statutory, inalienable, equally enforceable right and it has been earned by the sweat of their brow. As such it should be fixed, revised and modified and changed in ways not entirely dissimilar to the salaries granted to serving employees. ( 1983 LLI 0101 SC ) 


 5.            Therefore to term the Pension and pension related issues as “  welfare measure” is not out of ignorance of IBA but a deliberate attempt to mislead the  retiree which has been accepted by our great netas willingly.



 6.            Now on the statement of IBA that contractual relationship does not exist between banks and retirees, I have to state that it is  a well established fact on account of various judicial pronouncement that Pension is only a deferred portion of the compensation for service rendered. Bankers have worked hard beyond normal working hours which fact cannot be denied as the Association leaders have been demanding for fixed working hours  or alternatively compensation. The demand for holiday on Saturday is a culmination of this demand.  Thus, bankers have toiled hard, given their brain, brawn and blood during their hey-days and hence pension is only a compensation for their loyal service. Therefore, the contractual relations extend beyond the date of retirement.  It is for the reason that Pension is a deferred compensation that DA component is added to it and adjusted every quarter/half yearly.


 7.             If there is no contractual relationship with the retirees, why is that the Government of India is considering “one rank, one pension” issue of thousands of Armed Forces personnel? Is it not that there is periodic updation of Pension of Government servants?  Is it not that Pension Adalat are functioning at various centres to resolve the issues of retirees? Is it that Government of India is ill-advised by a battery of legal luminaries to consider pension related issues of pensioners? In fact, IBA  way back in March 2009 had issued a circular to all the Public Sector Banks, based on Government of India directive to establish a grievance cell  to address the grievances of retirees. A Further, in the same circular, PSBs were advised to holding discussions with representatives of the Association of Retired Employees periodically  say once in a half year so that grievances can be settled across the table.                         All the above acts of the government clearly and categorically lead us to only one thing that the Government in its wisdom has given due credence to  the judicial pronouncements and has considered it necessary to continue its obligation towards the retirees by way of improvements in pension/ family pension and so on. When this is the fact, the moot question is  that – is  the wisdom of those who govern the country less than that of IBA when they state that  there is no contractual obligation post superannuation?

Further, so far banks have not adhered to the issue of holding periodical meetings with Retired officers association.



 8.            In fact Pension  and the Pension Trust is the umbilical cord that sustains the contractual relationship of an employee post retirement.


 9.            Further,  If there are no contractual relations of an employee with the Bank post retirement,  then why is that  the IBA is discussing Wages and service conditions issues with majority of Union and Association leaders who are retirees although they may be representing their unions and associations.?   Arguing further, whether Public Sector Banks have given the mandate to discuss Wages and Service conditions issues with retirees? Going by the same logic, IBA should take the stand that they would discuss wages and service conditions issues only with serving employees.  IBA could have just followed SBI’s stand of discussing service condition matters only with serving employees. The fact of the matter is that IBA has a set of unprofessional people with old mindset and negative frame work of mind who do not know the difference between a Superannuation /retirement benefit / social security measure and welfare scheme and worst of all they do not want to see the issues in a broader canvass. They are cosy in dealing with these “re-tired” netas who have neither the time to apply their mind  nor do they understand the law of the land leave alone various decision of the courts on the issue.


10.            We may further point out that the Board of LIC as well as RBI has considered the issue of updation of pension and have recommended to the Government for consideration.  Does it mean that LIC Board has acted without understanding the issue of “contractual relationship”?  


11.            PSBs represented by IBA should act responsibly as a representative of model employer rather than discarding all the Pensioners in the same manner in which some children discard  their parents once their purpose is over.


12.            Pension fund which is primarily for the benefit of pensioners is being managed without any representation from pensioner. Sometimes the pension fund yielded negative return due to wrong investment strategy adopted by trustees and who is responsible for this irresponsible investment strategy ? If there is no contractual obligation then why our (retirees)demands were included under ‘”CHARTER OF DEMANDS” by UFBU AND OFFICERS CONFEDERATION?


Refereeing to repeated comparison of pension scheme in banks to Government pension scheme, IBA stated that while the Government pays pension out of Budgetary allocation, bank pension is a funded scheme.  At the time of retirement of an employee, the bank is expected to ensure that adequate funding is made for payment of pension/ family pension with provision for periodic updation of dearness relief payable. As such there is no provision for updation of pension in Banks.  Financial implications will need to be fully examined before any change in benefits payable to pension

·         I am happy that IBA has admitted impliedly that there is a need for the Banks to make provision for various pension related issues whereas the Government doles out money for pension related issues out of Budgetary allocation.


·         Why there cannot be any comparison of pension scheme in Banks to Government pension scheme when the entire Pension Regulation introduced in PSBs is based on Government Pension Scheme.  In fact the residuary provisions of PSBs pension scheme states as under :


Residuary provisions - 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.



1.            Now on the issue of “Financial implications” and “adequacy of Funds”: –  on this issue  we have to  refresh the memories of our bankers is that  even before the introduction of Pension scheme, IBA was singing the same song of “huge financial implications”, PSBs going to red etc., but see what has happened.  The Pension scheme has been introduced, trusts have been established and provisions for pension fund based on actuarial calculation are being made.


2.            Further, IBA has been raising this bogey time and again without putting on table what is the financial implications. It is rather unfortunate that the UFBU has also been buying this argument over the years.  On the other hand, the undersigned  have given the details of the Pension fund  position as on 31-3-2014 of public sector banks in my letter dated  24th Feb,2015 which is already in the Public domain. The IBA or the UFBU or any authority should contradict the same with cogent reasons and come out with their figures. Nothing of sorts is happening other than making statements in the air. 


3.            The IBA had ample time and resources at its command to gather this information for over more than 4/5 years yet they have chosen to make such statements. Infact, immediately after the demands relating to retirees were made, IBA should have got the data but they have chosen to keep quiet for more than 900 days  for obvious reasons.  


4.            Further, is it not true that PSBs have been lending to unscrupulous borrowers like Mr. Vijaya Malaya, Winsome Diamond and a host of others under political influence or pressure from the top management of the Bank? Is it not true that PSBs have taken over accounts from other smaller PSBs under instructions of CMDS  with increase ranging between 15 to 25 % knowing very well that these accounts are already showing signs of NPAs?  Is it not true that many of these accounts have been restructured within short span of time and are potential NPAs for which provisions have to be made if not today, tomorrow?   Are we not aware of the fact that some of the CMDs have worked only to manage the Balance Sheet  in order  to show to the Minstry of Finance of their performance and pocket the incentives in lakhs? Are we not   making provisions for willful defaulters in good measure?  The irony of the situation is that those who are looting the PSBs are enjoying the funds  whereas those who have toiled hard  giving their brain, brown and blood are being discarded with the statement that there is no “contractual relationship, inadequacy of funds etc.,  The worst part of this irony is that the leadership of UFBF is accepting these ludicrous averments of IBA without even a whisper.


5.            See the meek manner in which IBA succumbed to the oral diktats of former  Finance Minister  when the issue of payment of Pension to those who were elevated as EDs and CMDs.  The IBA floating all the rules issued instructions to PSBs to pay the Pension without raising any attended queries.


6.            Now understand why the UFBU leaders have meekly accepted these statements from IBA.  This is because, the Workmen Directors and Officer’s Directors on Boards of PSBs barring few have been a silent spectators to all the rot that is going on in PSBs. They have been enjoying the benefits of being a Directors and in some case these Directors have been pampered with  by these Chairman. Hence, the result is obvious.  You and I have to suffer for some one’s inefficiency – read enjoyment of benefits.  



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On LFC and Hospitalisation

Hospitalisation scheme would be extended to retirees also but subject to the condition that cost of the insurance premium would be payable by retirees. 

In RBI Group Insurance policy grade wise is available with ceiling in limits; such a scheme is required without payment of insurance premium as available in RBI. On LFC parties cannot take arbitrary decision; Even in case of Government Employees, Medical facilities are available post retirement.  The need for Hospitalisation is more pronounced  since officers of the Bank work under stressful conditions taking huge risk which is reflected in the form of health issues post retirement. This fact is admitted by even the UFBU.

Family Pension

While the IBA is sympathetic to the issue, the cost involved is significant and unaffordable at the present juncture. IBA will examine cost implications and sustainability of each bank, at a future date. 

Here again, IBA has not come out with facts and figures.  Future date should be certain and it cannot be vague. Improvement in Family pension is implemented in RBI. Our scheme is on the lines of scheme available in RBI and Government. So this need not be discussed, as it is already settled issue and it should be implemented from the effective date as the date of implementation in RBI. 

100% D A Relief

Firstly the matter is sub-judice as certain cases on this issue are pending for a decision with SC. As such IBA cannot take a decision at this stage. From a humanitarian point of view, IBA may examine  feasibility of providing 100% dearness relief neutralisation to pre-November retirees based on a detailed costing exercise 

This issue is implemented in RBI. Our scheme is on the lines of scheme available in RBI, so this need not be discussed, as it is  SETTLED ISSUE and it should be implemented from the effective date from FEB 2005 as the date of implementation in RBI. They have to refer the clause   12 of the pension settlement dated 29.10.1993, which says that,  Provisions will be made by a scheme, to be negotiated and settled between the parties to this Settlement by 31st December, 1993 for applicability, qualifying service, amounts of pension, payment of pension, commutation of pension, family pension, updating and other general conditions, etc. on the lines as are in force in Reserve Bank of India. Another ridiculous stand how can they mention “subjudice” when in the past “Revision in pension” and “Five year notional service” and “2ND option for pension “were implemented when the relative matters were “SUBJUDICE”?

On upgrading the Basic pension at the common and uniform index of 4440 points

IBA would examine the cost implication and sustainability of member banks.

Section 10 (7) Banking Companies ( Acquisition and Transfer of Undertakings ) Act, 1970 says “After making provision for bad and doubtful debts, depreciation in assets, contributions to staff and superannuation funds and all other matters for which provision is necessary under any law, or which are usually provided for by banking companies, a corresponding new bank [may out of its net profits deal are a dividend and retain the surplus if any.” That is to say, our issues of superannuation funds has prior charge over net profit. Provisions for advances, depreciation on assets and other provisions are made automatically without noise in the banking industry by banks and sustainability of individual banks is thought of at this juncture, when the question of retiral issues of superannuation funds comes IBA ad UFBU make big noise and talk without the base of legal plat form.   

Up gradation of pension for all existing and family pensioners

In view of Huge additional cost involved in funding the Pension Fund as per the requirements of AS-15-R, it would be impossible to consider this demand.

Section 10(7) Banking companies (acquisition and transfer of undertakings ) act 1970 and settlement dated 19.10.1993 para 10, prevails over the  Accounting Standard – 15 [Revised 2005]. Hence there is no meaning in the stand of IBA and UFBU. What is the huge additional cost is not quantified, without such quantification; the argument/stand of the signatories will not survive the test of law. I also do not understand as to why they kept quite for more than 900 days during which period IBA could have easily collected this information from  banks

Periodical updation improvement in pension along with occasions of wage revision of in-service employees on the lines of central government.

This being a funded scheme in lieu of contributory PF, as it is banks are contributing several times to statutory PF contributions towards funding pension scheme every year. Hence providing for periodic updation is not possible as this will have serious impact on the working of the banks.

My observations as above on affordability etc remains the same  on this issues. Section 10(7) Banking companies (acquisition and transfer of undertakings ) act 1970, says, after making provision for bad and doubtful debts, depreciation on  assets, staff cost and superannuation benefits, other provisions required under law, net profit can be used for payment of dividend to the owners.  The import of the above is that :


1.      Provision is to be made for bad and doubtful debts, whereas after the reforms and as per IRAC provision is to be made on sub standard assets also. Legally speaking, provision on sub standard is an additional stress on the profits. 

 2.      Further provision is made on standard assets also as per international standards and that is also additional stress on the profits.

      Depreciation on assets is to be made,

 4.      other provisions as per law to be made,

 That is 1 to 4 above are automatic and compulsory and at the time of making automatic and compulsory provision on the above 1 to 4, nobody talks about sustainability of banks. Sometimes provisions have eroded the reserves and capital and central government has pumped in additional capital from the resources of tax payers.

 5.      When staff cost and superannuation cost, is to be made, this is the struggle the pensioner has to make, when his legal right is to be enforced.


Government guidelines permit banks to provide benefits to retirees out of Welfare Funds. This may be taken up at the bank level.

First of all banks have to entertain discussion with representatives of retirees and their representative should be on the board of welfare fund. In Bank of Baroda, Welfare fund is misused for payment of canteen subsidy to in service employees against the central government guidelines. The one of the signatories of this Record Note of Discussion is from Bank of Baroda, is well aware of this illegal payment.  But he maintains silence against his own conscience.


It is high time that pensioners are given representation in Pension Trust, Welfare committee and in the negotiating committee so as to ensure that the interest of pensioners are not short shrift.  It may be further noted that inspite  of clear cut direction from your department to IBA to negotiate the retirees demands with the representative of the Apex  retirees organization IBA did not call the retirees organization representative  in blatant violation of your organization and released the record note of discussion on retirees issue on 25-5-2015. For the above disrespect to your direction stern action needs to be initiated against the Chairman , CEO and Personal Committee members of IBA

 In the light of what has been stated above I request you and the Hon’ble Finance Minister  to give direction to IBA AND CMDS OF PUBLIC SECTOR BANKS to resolve all the pensioners  issues which are included in the “charter of demands” as stated above immediately  and at the same time the resignees and the CRS be granted 2nd pension option to those who have completed 20 years of service in the bank

Thanking you,

Yours sincerely




And on behalf of thousands of affected retirees.




















MUMBAI  400051





FORT,MUMBAI -400001       





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