Friday, October 1, 2010

Panel formed to revise salaries of Public Sector Banks

The finance ministry has set up a committee to suggest a formula for revision in compensation of employees of public sector bank after the central bank has raised concern that low salaries could lead to attrition.
The committee will be headed by Joint Secretary Financial Services Alok Nigam and will have Bhaskar Sen, CMD United Bank of India and MV Nair CMD Union bank of India as members amongst others.
“If public sector banks are required to compete with private sector banks on a level playing field, there is a good case for compensating them too on a competitive base,” the governor of D Subbarao had said earlier this month.
The new committee will also examine the recommendations made in the Khandelwal report on Human Resource Issues in Public Sector Banks, submitted to the government in June this year.
As of now, public sector banks follow an industrywide wage settlement brokered every five-year by the , the industry body of India’s banks. “This new committee will look into the specific structure issues and how they can be made applicable across all state-owned banks,” said a senior finance ministry official.
This mandate is against the suggestions in the Khandelwal report that had suggested each bank negotiate its salary separately taking into account profitability and productivity.
The employees union of regional rural banks (RRBs) had already rejected the suggestion. Pay and allowances of regional rural bank employees are at par with the employees of the sponsor banks
The Khandelwal committee had also recommended the extension of the idea of according maharatna and navratna practiced in the case of other public sector employees to state-run banks as well. Such a status would give banks more freedom in deciding compensation. “There should be some separate allowance provided for rural stint, as financial inclusion is the top priority for both the government and the banks,” said the chairman of a state-run bank. The government may also set up a time frame for this committee given that over one lakh employees would retire from public sector banks over the next five years. 
Source - The Economic Times


  1. It is a welcoming gesture that MoF has finally recognized the immediate need for strengthenig the manpower of Public Sector Banks and has formed a committee to suggest the formula for revision in compensation to bank staff. It is, therefore, as a result of the realisation dawn on the RBI and the GoI that the overzealous IBA and the compromising Bank Staff Unions had signed settlement after settlement, which actually eroded the compensation to bank staff over past 15 years. This has happed due to ignoring of the need to have a level playing field in open economy and the IBA's eagerness to prove their newly found strength and the weakened Employees' Unions' anxity to some how conclude wage negotiations. The recently concluded Bank Wage Revision is the crudest of all the wage revisions in the past. It has the maximum number of anamolies and is causing maximum dissatisfaction among the staff. GoI is being sued in the cours as a bad employer. Banking industry will have to spend all its valuable time in attending court cases and will be fully engaged in litigation. In the process, the PSBs have been placed in a disadvantageous position in recruiting the suitable manpower.

  2. Bank employees were shouting from rooftops for proper wage revision since 2007. Realization dawn on RBI and GOI after signing of recent Bipartite settlement which has opened windows of dissatisfaction among Bank Employees.The recent Gratuity Amendment raising Ceiling was made effective prospective from 24.05.2010, leaving employees retired during 2008-2010 to lead their retired life with meager gratuity.The unions which used to give slogans "We will fight till we succeed" have changed their approach. MP's were able to get 300% salary increase with retrospective affect but thousands of retired bank employees were denied retrospective benefit. Unions are helpless.Will IBA/Govt implement new committee recommendations after submission of its report w.e.f from 9th BPS?.Who will fight for the retired staff?? Let us ponder over the issues; issues