Tuesday, June 14, 2016

Updation of Pension in Banks - Letter from Shri C N Venugopalan former Director State Bank of Travancore and Ex-Manager Union Bank of India

C N Venugopalan (Former Director, State Bank of Travancore and Ex-Manager, Union Bank of India)
“Nandanam”, Kesari Junction, North Paravoor, Kerala -683 513 
  Phone: 0484 2447994  Mob: 9447747994

No.160611                                                                                11th June, 2016
All beneficiaries of Joint Note and original pensioners
Updation of Pension in Banks
Retired bank employees / organizations are clamoring for up-dation of pension for years unable to establish that it is an already sanctioned benefit vide regulation 56 and demanding it as a fresh claim, thus strengthening the stand of the managements in not giving it.
Regulation 56 viz. Residuary Provision states that “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 to Central Government employees with such exemptions and modifications as the bank, with the previous sanction of central government, may from time to time, determine.  So long as IBA / banks have not sought any exemption or modification, it is in derogation of regulations that up-dation of pension is denied so far for years. 
The regulation makes limpid, beyond nay conundrum, that bank pension has invariably to be on the pattern of pension of central government employees and non-revision of pension with each bipartite settlement (unlike in the case of revision with each pay commission in the case of central civil pension) is in gross breach of the Pension Regulations put in place in banks with the nod of the Parliament.  Denial of revision is apparently in derogation of the pension regulations and rebelliousness to the Indian Parliament.
Regulation 56 is an inbuilt provision for up-dation of pension; but all are under an impression that  it has to be sanctioned by IBA / government not knowing that it is a statutorily vested benefit.  The demand for it without seeking enforcement of regulation 56 as per the intentions is preposterous.
In terms of regulation 3, all categories of employees had to exercise option within 120 days of notification, i.e. on or before 26.01.1996.  Unless the regulation 3 is amended, no one can be granted an option after 26.01.1996. the option  given under the joint note is ultra vires powers of IBA / banks. Having granted pension to 50,000 plus retired and conferred the coverage to about 5,00,000 employees on rolls, IBA / banks  can have no roll back on this.
Banks granted pension to VRS retirees who had  15 years of service  when qualifying service for pension to VRS retired was 20 years in terms of regulation 29.   The pension so paid was unauthorized by pension regulations and pension fund trust rules.  Pension Fund Trust has no provisions to  pay such pension. To escape from the accountability aspect of the erroneous payments, banks amended regulation 28 relating to superannuation pension by adding to it a clause that “with effect from 1st sept.2000, pension shall also be payable to an employee who opts to retire through any scheme formulated y by the bank with the sanction of the government, after purring in a service of 15 years.   The net result is that regulation 29 on pension on Voluntary Retirement remains the same and the pension so paid is still unauthorized.    Confusion was created in regulation 28 on Superannuation Pension by adding to it that an employee who has put in 15 years of service can get pension on superannuation.  Are these not stupidities?
Clause 10 of Joint Note stipulates that IBA  should send it to government for its approval and further action in terms of section 19 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980.  Section 19 (4) of the Act  stipulates that the  amendment to regulations carried out has to be laid by the government,  as soon as it is made,  in the houses of the Parliament for 30 days and will have effect only if approved by the Houses , or be of no effect, if not approved.  The Joint Note framed on 27.04.2010 has not so far laid in the houses albeit lapse of 6 years and cannot be laid forever immediately on account of passage of six years.  It is thus obliterated and is void.   It is on the basis of the void joint note that banks denied pension from the date of retirement to the arbitrary date 27.11.2009 fixed in it to employees retired prior to the date of the Joint Note.  
Regulation 5 (3) fixes the banks as sole contributor to Pension Fund.  And the contribution banks make is not a gratuitous one, but is the statutorily payable EPF contribution, which the banks were to make pursuant to EPF and Miscellaneous Provisions Act, 1952 prior to notification of Pension Regulations.  Any contribution to Pension Fund is thus the deferred wages of the employees statutorily payable by banks . It is not the money of the banks;  but the money of the employees.
The contribution at 56 percent of EPF paid on retirement in the case of retired employees and 2.8 times pay for November, 2007 in the case of employees on rolls raised by banks on the basis of the Joint Note for granting second option is inconsistent with regulation 5.3 and regulation 11.  The boards of banks have no powers to make such regulations / amendments that prejudice the validity of what is done earlier under a regulation  vide section 19 (1) and 19 (4) of the banking companies ( acquisition and transfer of undertakings) Act, 1970/1980.  as such, the  Joint Note containing such prohibited covenants can never be placed in the parliament to take its nod.  This is why the Joint Note is not so far laid in the Parliament.  
If there is any organization i.e. union or association that is worth its name and banner and is having commitment to the members in the industry, it can simply give a notice to the Central Labour Commissioner pointing out the breach of covenant 10 of the Joint Note which makes the Joint Note obliterated and void.  If  so the amount of unlawful collections  made by banks to Pension Fund from retired employees and employees on rolls and the pension denied from the date of retirement to the date 27.11.2009 will become payable back to all,  together with compound interest.  Pension Fund had been earning income on the unlawful collections at compound rates by way of interest on Pension Fund investments and banks run no loss in making the refund to those concerned.   
The Pension Funds of all banks have money enough to pay three to four times the present pension to all their pensioners as the resources are abounding in them and the annual growth can contain such payment with no impact on profits.  To cite an example the Pension Fund of union bank had a growth of Rs.. 6574.01 crores in five years after the date of the Joint Note.  There are 3,106 retired employees and 17,473 employees on rolls from whom unlawful contribution of Rs. 134.33 crores had been collected on the basis of the Joint Note. After repayment of the amount with interest, which can be contained in a maximum sum of Rs.300.00croes, the five years’ growth will still have a residue of Rs. 6,274.01 crores.  This sum can foot payment of arrears of pension with interest to 3,106 retired employees at Rs..2.02 crores per capita.  The actual arrears payable per capita will be in the range of Rs.15.00 lakhs  to Rs. 35.00 lakhs  only.  When the amounts can be paid without any pinch either to the bank –as pension is payable out of pension fund with no impact to it – or to the government by way of any budgetary allocation, non-payment is totally meaningless and lawlessness.  The present pay out of benefits i.e. pension / family pension is only 23.25 percent of the annual growth ( year ending 31.03.2015).    The position of other banks is also similar and all of them can pay two to three times pension to all their pensioners, without affecting profits.
IBA and banks cheated the work force by not granting an option when the government directed IBA to advise all banks to scrap the clause for forfeiture of service in regulation 22 (4) (b) and to give effect to it vide F. No.4/8/4/95-IR dated 24.12.1997 which was received at IBA on 27.12.1997.  Giving effect to it meant that an option be extended in the wake of the deletion to those who could not opt when thee deleted clause was present in the regulations.  Banks amended the regulation but did not give effect to it, duping the target group.    Union Bank amended the regulation on 27.02.1999 and kept it clandestinely   in camera until 08.10.2002 and published it with a delay of 43 months on that date.   There were no unions/associations who could detect the fraudulent acts / omissions and challenge it.
Section 10 (7) of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980  empowers the Board of a bank to declare a dividend and to retain surplus profits as reserves in its books only after making due provisions to superannuation funds. Given that the public sector banks had,  all along been, declaring dividends to the government, which was applied for paying higher salaries and pension to  government employees and for paying salaries to Ministers, MPs etc. all had been robbing bank employees, the Peter to pay to government employees, the Pauls.   The bank officer had a higher pay than the government office in the 1970s.  When the bank officer drew Rs.500/- the government officer had Rs.450 only.  With the nationalisation,  an ethnic prejudice that set in  the minds of government officials resulted in staggering bank pay on a level with government pay at Rs..725/-.   Though parity of reasoning requires that bank pay ought to be protected at the level of pay in government, it is now lesser by Rs..30,000/- to Rs.40,000/- a month.  The bank employee worked for six days a week in hectic mode while the government employee worked for five days only in a casual manner.  All policies of government are implemented through banks.  The government employees merely watch / monitor.  The process of nation building was done by bank employees while the government employees are merely regulating and monitoring.
with nationalisation of banks and government ownership, bank employees became quasi-government employees whose salaries are reasonably to be foot by the government.  But they draw their compensation out of the profits they make and not from exchequer.   They do not pass on the burden to the government.  Yet they are given a step motherly treatment by the government,  in the matter of compensation for work. 
The leaders who have raised hefty subscriptions from members have never lived up to the expectations of members.   In signing the Joint Note too, they   surrendered even the statutorily vested rights of the members.  Their have to be more loyal to the managements that regularly collect subscriptions / levies from members through check off and give it to them.  The Leaders of various organizations were of the view that fresh option is not viable in the industry.  Much was their concern in not securing fresh option.   After fighting for option for some five years after my voluntary retirement at the age of 49, I had to issue a Circular on 10th January, 2006 , country-wide, to appraise the victims who missed the option for pension  about the follies of the organizations.  The following link will furnish testimony : https://drive.google.com/file/d/0B_UI4pgwLPCjYU9zVHd1azdEdWc/edit?usp=sharing .  Please click on it. The issue of option which was dormant till then came into limelight only through this.  This only forced organizations, that were silent on it for years to make a demand for it.   Though a MOU was signed on 25.02.2008 after three to four agitations to conclude the matter within three months, it took another 26 months to sign the Joint Note on 27.04.2010.  And while signing it, the statutorily vested rights of the employees were surrendered.  It was the silent, solo, valiant struggle I conducted for a decade that brought 5,00,000 employees on rolls within the abmit of pension again and secured pension to about 50,000 retired bankers who were on cross roads.   It is this work that redeemed the right of pension that was lost forever for the bank employees and brought about a renaissance in the industry. Retiree organizations got so much members   as a result of second option as otherwise, they would have got scattered away.
Time is not late even now for us and for organizations too. The unions can merely appraise the CLC  and ask to set aside the Joint Note on the ground that clause 10 of it is remaining undone and also make a demand for proper compliance with regulation 56.  It can take care of refund of the unlawful contributions with interest to all, pension from the date of retirement to all those who are denied it till 27.11.2009 and also  up-dation of Pension.
If the banking barons numbering some 100 to 200 can act in derogation of rules and regulations and deceive the vast number of pensioners and employees on rolls with their money power, the deceived have to defend themselves by remaining united and proving their might.    If all the victims join together and take legal recourse, nothing is impossible for them.  We may be able to hire Prasanth Bhushan, Jethmalani etc also, if needed. We have a strong case and we can fight legally engaging prominent counsels up to the level of Apex Court, in a different way.   Sometimes, three to four suits may be required to make claim in each one simple, sharp and indefeasible.    If versatile decisions are emerging at High Court level itself, there will be no scope for IBA to fight it in appeal and take it beyond it. 
It is not necessary for all to join the writ petitions.
Thanks and Regards
Yours sincerely,


  1. I agree the entire note of C N venugopalan, Sir. United we stand. Let us be together for the cause of pensioners. Purushottam Sharma Jalna (maharashtra)

  2. Resigned Officers (otherwise eligible for pension) have also been denied pension! Their number is small for Retired employees Associations to take-up their cause! IBA is not doing a favour to banks by denying pension to them!

  3. Resigned Officers (otherwise eligible for pension) have also been denied pension! Their number is small for Retired employees Associations to take-up their cause! IBA is not doing a favour to banks by denying pension to them!

  4. united fight and agitation is necessary to achieve our demand- organise struggle fight and achieve

  5. The points made by Shri venugopalan are relevant and appropriate,but what to do bank pensioners have no recourse for grievance redressal.Let us go to court.

  6. So long these duffer leaders with sold conscience continue to represent the employees and retirees nothing shall fructify. After 10th bps , retirees agitated on the facebook , clamoured for judicial recourse but with the passage of time the steam phased out . Majority of bank retirees are docile , spineless and unconcerned for their own cause and do not want to take the trouble to fight for their rights which is the most disgusting thing. The govts looted the banks through its favorits and unions looted its members and employees specially in pursuit for high positions for greener pastures watched as onlookers as if they had no belongingness to their respective banks.

  7. The points raised by Sri.C.N.Venugopalan are most relevant and we can certainly win our case for updation for pension under Regulation 56 of B.R.Act. I hope that UFBU will take cognizance of this provision and put up our revised demand/eligible right to IBA for IMMEDIATE IMPLEMENTATIon. Otherwise UFBU HAVE TO TAKE UP THIS ISSUE IN THE LIGHT OF THE ABOVE OBSERVATION OF COM.C.N.VENUGOPALAN WITH THE CENTRAL LABOUR COMMISSIONER FOR CONCILIATION ONCE AGAIN. FOR THE PAST ONE YEAR IBA IS TELLING THAT THEY ARE IN THE PROCESS OF COLLECTING DATA FROM MEMBER BANKS TO ASSESS THE VIABILITY FOR IMPLEMENTATION WHICH CLEARLY SPEAKS OUT THEIR DELAYED TACTICS.Hence it is the need of the hour to speed up our efforts to achieve our legitimate right.

  8. If the matter is so simple and straight then IBA or bank boards can not go against the provisions set out. Anyway matter can be certainly taken up by a small group of petitioners representing couple of banks and take it to logical end. ALL WILL BE BENEFITED

  9. Congrats to the Central Government emoloyees and the Pensioners expecting good news today. Where are our so called Associations who are still standing on ego and have failed to unite and fight the matter jointly in Supreme Court?