Bank unions want ‘adequate increase’ in salary in 10th bipartite wage settlement

MUMBAI, JUNE 12:  

Bank unions want ‘adequate increase in salary’ as part of their demands to the management of all banks, represented by the Indian Banks Association (IBA). The 10th bipartite talks between bank unions and IBA are on currently to decide the quantum of wage increase for bank employees for the period covering November 2012 to October 2017. Each settlement is valid for a period of five years. The earlier settlement expired in October 2012.

‘ADEQUATE INCREASE’

C.H. Venkatachalam, General Secretary, All India Bank Employees Association, while laying out the case for an ‘adequate increase’, refused to quantify it. He said that employees should be paid more in view of the alarming price increase, increased job profile, wages in comparable sectors and the profitability of banks.

The 8th wage talks covering the period 2002-07 provided bank employees a 13.25 per cent increase in wages on the average while the 9th wage talks (covering 2007-12) gave them a 17.5 per cent increase on the average.

Venkatachalam said that the priority for unions in this settlement was to improve the dearness allowance (given to compensate inflation). He said that unions wanted DA to be credited on a monthly basis rather than on a quarterly basis as was the case now. He also said that unions wanted housing for all employees, improved transport, medical allowances and better post-retirement benefits such as family pension/ gratuity.

WAGE TALKS

Responding to the criticism that wage talks tended to meander for a long while, Venkatachalam said that unions were in favour of conducting them in a time-bound, expedited way. IBA had also agreed with this view and he hoped that negotiations would be over within six months.

When asked if unions were agreeable to the proposal of variable pay linked to productivity, Venkatachalam said that they were open to proposals that offer incentives for performance or motivate employees. However, he clarified, that these could not be in lieu of the increase in basic emoluments that they were demanding. He also debunked the ‘cost-to-company’ concept that was floated by the IBA during the talks held last week.

He said that the concept wouldn’t work and the industry was not ripe enough for it. Elaborating he said that cost of establishment was not decided at the industry level but at the level of individual banks and their negotiations couldn’t cover this aspect.

http://www.thehindubusinessline.com/industry-and-economy/banking/bank-unions-want-adequate-increase-in-salary-in-10th-bipartite-wage-settlement/article4807652.ece

UFBU MISERABLY FAILS IN THE FIRST ROUND ITSELF - Part II BY SHRI RAJESH GOYAL

This is in continuation of our article under the same name (Part I), which was uploaded last week.   In that article I have analyzed the implications of the announcements made by UFBU vide their circular dated 22th April, 2013.   That article received wide applaud from bankers across the country.    As promised in the same article, I am now writing Part II of the same.

In their circular dated 22/04/2013, UFBU had informed the members that next round of talks will be held in mid May, 2013.   However, that never took place.   IBA has very coolly and conveniently ignored the promise to hold talks in mid May, 2013, and has shifted the same to 7th June, 2013 i.e. delayed by at least 3 weeks (22 days).  As per my previous article calculations, the delay of 22 days means loss of about Rs 65 crores to bankers merely in the form of interest alone.   Thus, UFBU has failed to put sufficient pressure on IBA to ensure that as promised by IBA, the meeting is held by mid  May.  Bankers will notice that now the meeting will be held after 6 weeks from the last meeting i.e. 22nd April, 2013.

As a follow up UFBU circular, AIBOC too issued its circular dated 25/04/2013 under the heading  'ROAD BLOCKS IN THE NEGOTIATIONS AIBOC IS FULLY PREPARED TO OVERCOME', wherein it reiterated the developments already given in UFBU circular (which I have already discussed in Part I of the article).   However, certain new revelations came to light. AIBOC in itscircular says "the attitude of IBA appears to be a confronting one rather creating a favorable climate for a reasonable and fair salary revision. We have showed restrain on our part but have at the same time conveyed to the Negotiating Team that the Management Issues needs to be fine tuned to see that the time tested bipartite negotiations are not jeopardized in the process".

Thus, as confirmed by AIBOC,  IBA's attitude is that of confrontation rather than amicable negotiations.  This is on the expected lines as has been clear in the case of 2nd pension option cases where IBA has tried to put maximum hurdles .  Sadly UFBU, including AIBOC, had been mook spectators.  It was merely because of the efforts of some of the senior bankers in the Courts  that IBA had no alternative but offer 2nd Pension option to bankers who were initially being denied the same.    Now AIBOC boosts that it is FULLY PREPARED TO OVERCOME ROAD BLOCKS, yet the role of AIBOC since the last BPS, specially for pensioners, does not give me that confidence.   They are in the habit of meekly caving in to IBA tactics (as has happened recently in the attempt to oust Mr Srinivasan from BCCI !).   I wish them good luck and we will closely watch their attitude towards the banker's interests. 

In view of the forthcoming meeting with IBA, an internal meeting of UFBU members was held on 23rd May, 2013, and a circularhas been issued by UFBU on next day i.e. 24th May, 2013, to apprise the members about the developments at the internal meeting.   The circular once again beats around the bushes and at the end says  " the UFBU would pursue the demands on wage revision in the next round of talks with IBA scheduled on 07.06.2013".  To announce this at the end of one page is nothing short of a joke to the comrades.   Can any one say that at the next round of talks with IBA they will not purse the demands on wage revision ?  Is it not Disgusting?

Towards the end, the circular talks about the meeting with Chairman of  IBA (Mr K R Kamath) etc.  The list of demands placed includes mostly the old pending demands like compassionate appointments, KYC norms, Clearing system etc. alongwith request for early settlement of the wage revision and 5 day week.   It appears from the circular as if residual demands are more important rather than wage revision.   I have been time and again insisting that these demands needs to be delinked from wage revision, or else bankers will again be cheated.     The circular at the end boosts of "Chairman gave a patient hearing to the issues raised by us".  The UFBU leaders are happy that IBA Chairman gave a patient hearing.  Is patient hearing is sufficient when all the banker community is becoming impatient about the delay in starting of the 10lth BPS talks in the right earnest? 

I have been advising since beginning that UFBU must insist for an outer limit for discussions and finalization of 10th BPS.    Originally, I had thought of about 10 months, but now 7 months have already passed and talks have not made an inch of headway, rather after raising of demands by IBA, it has gone backward.   Thus, now UFBU must insist that talks be concluded maximum by 31st October, 2013 i.e. within 1 year from the date it had become due.  Talks needs to be held within a gap of one week to 10 days.   The maximum gap between two talks should not be more than two weeks in case of emergent cases like meeting with RBI or FM of the concerned members from IBA side. 

UFBU needs to appreciate the concerns of their members about the delay in wage revision and give concrete proposals to show some progress in this front or else members will be more disillusioned. 

Waiting alongwith my fellow bankers  for some real progress in talks as on 7th June, 2013

.

 I HAVE RECEIVED SOME INFORMATION ABOUT TODAYS TALKS AND WILL POST IN MY NEXT POST.

You can give your feedback / comments about this Article.

http://www.allbankingsolutions.com/Press-Release-Views/UFBU-no-progress-May-2013-Part-2.htm

RBI GOVERNOR AGREES THAT PENALTIES ON BANKS IN INDIA ARE PEANUTS BY SHRI RAJESH GOYAL

I will like to congratulate Mr Subbarao, RBI Governor, who has publicly admitted that penalties prescribed in Indian Law  for violating banking norms are "peanuts",   I have written on many earlier occasions about the petty penalties for violation of the norms.   In 2011, in an article relating to Rs 32,000 crore scam in derivatives, I have written the following :-

"RBI, the only regulator of our Banking system,  had miserably failed to take timely steps so as stop the Banks openly flouting these rules.   In a reply to RTI query,  RBI appears to have taken a stand that it does not vet all the forex derivatives products sold by banks in the country.   However, under pressure from all sides, RBI in April 2011  fined 19 commercial banks, including the country’s largest, State Bank of India, for mis-selling derivatives products to clients  RBI has imposed a small fine of Rs 5-15 lakh on these banks for not complying with its instructions on derivative products.  Who had to pay this fine? Poor shareholders of these banks  had to pay these fines as orders were not to recover the same from salaries of CMDs / EDs etc.  Is a penalty of few lacs on a Bank is sufficient when losses to the economy are in thousands of crores of rupees?  Has any other action like suspension or dismissal of any Head of the Bank or other officials has taken place?  Why RBI had not forced some Heads to roll down for such a big scam.  In 2G scam, even ministers have been jailed when the matter was taken up seriously by honourable SC"

Had RBI listened at that stage and taken strong action against top bosses, today Banks would not have dared to flout the banking norms again and again.

Now, after almost two years of my writing the above views at ABS website, RBI Governor has realised and has been humble to admit that  penalties slapped by RBI are indeed 'peanuts'.   However, he has conveniently shifted  the onus of responsibility on Parliament.   RBI Governor dismissed the perception that the central bank is going soft on errant banks which have been exposed recently by Cobrapost sting operation.   He has tried to wash his hands by saying that he leaves it to Parliament the issue of amending laws to provide heavier penalty on banks indulging in such acts.   Why did he not send a strong recommendations to GoI to enact laws which are in line with global trends?  On number of matters, I am a fan of RBI as it has a global view, but in case of bringing transparency in these matters, RBI has never tried to take the things head on with GoI.   Thus, there is a need for immediate recommendation from RBI to GoI that such penalities should be in line with global trends and not "peanuts" as admitted by RBI governor himself.

 On the question of action that is being contemplated by RBI on banks which have flouted the norms and are alleged to have indulged in money laundering, RBI Governor is reported to have said 'I cannot tell you because action on this has to be taken at lower level at the RBI'.     Further to the question of the amount of penalty which could be imposed on erring banks, he said the RBI can levy a maximum of Rs 1 crore. He candidly admitted that  “Barclays was penalised $450 million  (at current rate it is about Rs 2,500 crores) and HSBC was some amount like that. So we are talking about peanuts here.”

It appears RBI Governor has chosen an easy way to bring himself out of the mess exposed by Cobrapost.    First of all, under his very nose,  Mr K C Chakraborty openly dared to give a clean cheat to three private sector banks exposed in the first leg of the expose.     I have yet to come across any news wherein he snubbed his Deputy for such bizarre statement to the press.     Now RBI Governor says action will be taken at a lower level ?  Does he mean that it will be at DG level or even lower than DG level.   If it is so, then we know the fate of the action., which will tantamount to cover up the misdeeds rather than cleaning the system.    I wonder why the action against banks has been delegated at a lower level?  Is it considered to be a small issue by RBI?   I feel such actions must be taken with the approval of RBI Governor and not by a low ranked officers in RBI, as it directly affects India as a nation.

Based on the media reports,  we can now fairly predict that some banks may be slapped with maximum penalty upto Rs 1 crore only.  Such penalties too will be paid only and only from the shareholder's pocket as such penalties will be out of the profit of the bank and not from the pockets of CMDs / EDs who are responsible for flouting of banking norms.   For small mistakes, the lower ranked officers are penalised by stopping their increment, reversion to lower posts or even dismissal.    I can guarantee on receipt of orders for such penalties, most of the CMDs / EDs will be grinning as they are neither going to lose any money from their pocket or losing their shirt.  It is an open secret in the banking circles that lower ranked officers are threatened and cajoled by top bosses to violate KYC and other norms, so as to meet the targets.    People who try to resist are made fun of in the open meetings and are pulled on for no fault of theirs.  

I hope, RBI Governor, will explore the possibilities of fixing responsibilities even beyond the monetary penalties.   In case, RBI Governor believes that his hands are tied owing to low monetary penalties in law, he needs to explore the possibilities of strict action against some of the defaulting banks by ordering dismissal of some of the CMDs / EDs so that a strong message is sent in the banking industry that such non sense will not be tolerated in future.

I am of the view that RBI has sufficient powers to take action against top brass, in case of such violations so as to send a strong message among them.   If RBI fails this time, all the top brass of flouting banks,  will soon show their grin in public as our politicians do after every scam.

I would also like to raise one more question i.e. regarding the internal enquiries set up by banks which have mostly given clean chit to their respective banks.   These were nothing but sham to cover up the misdeeds of top brass.     In case RBI finds violations, then why RBI should not also hold responsible those who have connived with top brass in giving clean chit in their internal enquiry.   In case they are also taken to task, in future, even internal enquiries will be more prudent and fair.

I hope RBI Governor will listen to my plea,  and ensure that maximum penalty as per law is imposed and at least some heads roll out (not at lower level but at the top level) so that the process of cleaning up the banking sector starts in the right earnest.   I hope he will leave his imprint before he retires

You can give your feedback / comments about this Article.   

http://www.allbankingsolutions.com/Press-Release-Views/Peanut-penalities.htm

FM GIVES A SLAP ON THE FACE OF CMDs / EDs OF NATIONALISED BANKS WHO TILL YESTERDAY WERE PUNISHING OFFICERS FOR FAILING TO MEET TARGETS FOR SALE OF GOLD COINS by RAJESH GOYAL

"Chidambaram urges banks to discourage gold buying".   I have beenwriting about certain issues  on this website since I have taken VRS.  During my service itself I was against number of such practices prevalent in banking sector.   One of this was the aggressive marketing of gold coins by banks.   They used to give huge advertisements (at the cost of bank profits) to boost sale of gold coins specially at Akshay Trithya and Diwali.  Most of the Branch Managers were given targets for sale of gold coins.  There was all round competition among banks as to who can sell maximum gold coins.   Sometimes I felt as if sale of gold coins is the core business of banks!   Such aggressiveness and marketing at the expense of public created euphoria among the public to buy gold coins as they were cajoled to believe that only bank gold coins are pure.   Thus, around festive season, sale of gold coins assumed alarming proportions.

I had to face music even during my service when I used to resist such aggressiveness on the part of my Bank to encourage sale of gold coins.   I was of the firm believer that such sale is neither the core business of banks nor it is in the interest of the nation in the long run.   My seniors and even colleagues used to snub such views.   I was time and again reminded that as a soldier we have to follow the instructions of CMDs / EDs without questioning.   

Thus, after taking VRS, when became a free bird, I started expressing my views through website.   One of the issues which we have taken up time and again was the 'banning of sale of gold coins by banks'.    Although number of bankers supported my view point, yet at the top level it was brushed aside as immature views of a lower retired functionary.  Anyway, we continued to hold our view.

 The aggressiveness shown by banks in marketing of gold has created an atmosphere where the craze of buying gold has gone up manifold in last few years.  People with black money soon realised that this is the best avenue to convert their black money into gold.   Earlier such corrupt black money holders were at the mercy of jewellers who they could not believe 100%.    Thus, in last few years, huge amounts of black money have been converted into gold in last few years.    After a gap of few years, even IT people can not question the sources of such gold.    Thus, top brass of banks by encouraging sale of gold coins have done the worst harm to our economy.  

Finally, RBI and GoI have realised the folly of not stopping banks the aggressive marketing of sale of gold coins.   However, this has come too late, as our current account deficit has gone beyond control and  corrupt public has already realised the potential of keeping black money in pure gold which can not be questioned if you hold the same for few years.  

Now, I would like to know the views of the CMDs / EDs / GMs of all nationalised banks, who have beenencouraging such sales and even punishing officers who were slow in such sales.   Is it not a slap on their face?   We are happy that finally. RBI and GoI have fallen in line with our views.  I hope CMDs / EDs will shed their narrow mind attitude and will listen to few honest voices around them.   They have to start thinking in broader terms in the interest of the nation.    This will come only if they are keep away the flatterers.

I hope soon RBI and GoI will realise their mistakes on other issues like sale of third party products, cartelization in respect of saving interests etc.   We will continue to write freely and frankly about what we feel to be in the interest of nation in particular and banking industry at large.   Some top brass may not agree with us but as time passes they will realise their follies.

http://www.allbankingsolutions.com/Press-Release-Views/Gold-coins-stop-sale.htm

Merger of associate banks can start by September: Pratip Choudhuri, SBI chief

JAIPUR: State Bank of IndiaBSE -1.27 % today said the proposed merger of its five associate banks with itself could start by September after a high-powered committee submits its report on the same. 

The high-powered committee headed by SBIManaging Director S Vishwanathan would furnish its report by July-August, and later based on the report the merger process could start by September, SBI ChairmanPratip Choudhuri told reporters here. 

State Bank of BikanerBSE 0.37 % and Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala, and State Bank of TravancoreBSE -0.42 % would be the target associate banks for merger, Chaudhuri said. 

Out of five associate banks, three are listed, and two are in the direct ownership of SBI, he said, adding "we would take non-discriminatory way to decide and choose merger of any of the five associate banks. It would be a long process that would take employees' confidence and participation". 

SBI's capital was not so strong earlier, but with the March's balance sheet the capital became very strong and for merger there should be a cash of Rs 1,000-3000 crore, he said. 

SBI did first ever amalgamation of its associate State Bank of Saurashtra in 2008 followed by State Bank of Indore in August 2010.
http://economictimes.indiatimes.com/news/politics-and-nation/merger-of-associate-banks-can-start-by-september-pratip-choudhuri-sbi-chief/articleshow/20483256.cms

UFBU MISERABLY FAILS IN THE FIRST ROUND ITSELF - Part I by shri Rajesh Goyal

Vide Circular No 7 dated 22/04/2013, UFBU informed the cadre that a meeting with IBA has taken place wherein IBA informed that the total establishment expenditure / wage bill of the public sector banks as on 31/03/2012 is Rs 56,292 crores which will be the basis of negotiations.   Thus, assuming that UFBU is able to extract 20% wage hike, the total benefit to workmen and officers will be Rs 11258 crores or about Rs 1,000 crores per month.   Considering that the rate of interest on FDs for staff is around 9%, the bankers are losing Rs 90 crores per month in the shape of interest alone.   Thus,  for amount due from 1st November, 2013, bankers have already lost over Rs600 crore merely in the form of lost interest on their due share.    I am sure, union leaders will cry foul and will take a similar stand (zero loss theory) as was taken by Mr Kapil Sabil in 2G case when CAG has pointed out a loss of over Rs 1.76 lakh crores.   But it is a fact and bankers understand the same.    Now even Kapil Sibal is afraid of talking about zero loss theory.   Similarly, soon UFBU union leaders too will realise their mistakes and will bow to cadre pressure.   

In the above circumstances, I feel UFBU needs to put pressure on IBA that delay  beyond 10 months will make the bankers entitled for interest at the FD rates for 3 years or so.    This will force IBA to revise its strategy of delaying tactics.  

Now coming to second part of the above circular, wherein UFBU has informed that IBA submitted the following Management demands :

 Officers:

1. (a) Introduction of Cost to Company.
2. (b) Introduction of Performance linked Variable Pay.
3. (c) Restrictions on applicability for wage revision.

Workmen:

2. (i) Introduction of Cost to Company.
3. (ii) Introduction of Performance linked Variable Pay.
4. (iii) Deployment of Staff by invoking Para 536 of Sastri Award and superseding the provisions of 8th BPS.
5. (iv) Rationalisation of special pay posts.
6. (v) Departmental action to continue after retirement.
7. (vi) Premature retirement of workmen employees in public interest after 55 years of age or 30 years of service.
8. (vii) Simultaneous disciplinary action under departmental enquiry as well as judicial proceedings.

IBA further stated that they would make their presentations on these issues in the next meeting.They also informed that the next round of discussions would be held by the middle of May 2013.

Readers need to note down few things.  First of all, why IBA has been allowed to raise demands at this late stage.   If Unions were required to submit their Charter of Demands by 31st October, 2012, then why IBA has not submitted their so called demands by that date itself.   UFBU leaders have failed to resist.  They need to say that they will not entertain any demands from IBA.   It is nothing but delaying tactics and derailing the wage revision talks.  I was most surprised to read that IBA would make their presentations in next meeting that was to be held in middle of May 2013.   This clearly shows that IBA is hell bent upon delaying the talks and ensure that bankers lose almost Rs 90 crore per month in the shape of interest itself.   Why IBA had not come prepared with presentation in the above meeting itself.   Did UFBU leaders questioned IBA?   UFBU instead of raising the real issue of delay and honorable wage revision is still talking mainly of compassionate appointments, grid based clearing system, which are of little consequence for 99% of the bankers.   These issues needs to be delinked from Wage Revision,  UFBU should concentrate on higher salary for young officers and good retirement benefits for retiring and retired bankers.

Now coming to demands of IBA in detail.   I am of the view that at this stage IBA should not be allowed to raise their new demands.  The introduction of cost to company concept is being mooted to make fool of the union leaders in particular and others in general.    If this is accepted, the maximum cheating will be to officer cadre as their perks (which only some of them may be availing) will inflate their salary on papers.   Only today (29th May, 2013)  in an advertisement for recruitment in Navy, they have advertised that CTC for a Sub-Lieutenant would be approximately Rs 65,000/- per month (excluding the free medical facilities, LTC, canteen facilities, entitled rations, government accommodation, loans at subsidized rates.  I would like to add here that Sub-Lieutenant is the lowest ranked in Navy and his Basic Pay is Rs15,600/- with grade pay of Rs5400/-.

The second demand of Performance Linked Pay is also fraught with lot of risks.   My experience of over 3 decades in bank does not give me confidence that if such pay is agreed upon, it will lead to payment to honest and hard working bankers.  Most of the time, the plum foreign postings or less riskier jobs are given to people who are flatterers of top bosses.  I am sure, unlike in private sector, the performance linked pay will mostly go to people who keep on buttering or are ready to do flout norms in sanction of loan etc.  Thus, officers need to oppose this tooth and nail till a fool proof systems are put in place ensuring that it really goes to really performing bankers.   I think bankers must be aware that in recently concluded IPL the Fair Play Award has been given to Chennai Superking Team !  Even a layman can tell that Chennai team did not deserve as Team Owner himself has been found betting and is in police custody now.  Such blatant things are common in banking too.

UFBU leaders needs to do their home work well.  Have they asked IBA to give details of the components of Cost to Company and what is the total salary at present (cost to company) for a newly recruited clerk and a new PO.  What is the same at the end of each scale alongwith cost of various perks?   If they have not done this exercise, I am sorry to say they will miserably fail in getting an honourable settlement.  In case they have done this exercise, they need to publish the same immediately so that bankers know what bank thinks the present Cost to Company of bankers at each stage of every scale.   Union leaders needs to be fully transparent in this regard and let such details are discussed thread bare in the public.

I will be soon writing more about the next circular of UFBU which has already been issued.   In this age of internet, workmen and officers can not be taken for granted as was done by UFBU in the past.  Information flows very fast.   I request all our readers to send us any new development in wage revision which comes to their notice alongwith the source.   I hope UFBU leaders will learn their lessons well now or they will continue to face wrath of the bankers.

http://www.allbankingsolutions.com/Press-Release-Views/UFBU-no-progress-May-2013.htm