The Indian Banks Association has pegged the cost of updating pension in PSBs at Rs 95,000 crore, a burden it says banks will not be able to handle.

Public sector bank employees write to PMO seeking pension update
Money Banking Thursday, July 04, 2019 - 09:53

After having failed to have their way in the negotiations with the Indian Banks Association (IBA), the employees of the public sector banks now approached the Prime Minister’s office directly with the request that their pensions be updated. They are citing the pension update granted to the employees of Reserve Bank of India and have claimed that the pension scheme adopted by the public sector banks is no different from the one enjoyed by the RBI employees as well.

The managements of the banks look at it from a different perspective; the impact of an update of the pension plan for the RBI employees is just Rs 858 crore, whereas it would lead to a much higher outgo if implemented for the PSB employees. IBA has estimated this to be around Rs 95,000 crore. In addition, there are several banks which cannot afford the higher outlay towards pensions, the IBA claims, one of the reasons for the talks with the bank employees unions collapsing.

The government had initially not budged on the demand from the RBI employees on the same grounds that paying them will immediately lead to the demand from the Public Sector bank employee unions, which is what is happening now. It remains to be seen how the PMO will react to this demand placed at its door now.

The matter will have to be dealt with at the end of the IBA and then brought to the Union Finance Ministry’s banking section before any decision could be arrived at. The PMO at best can forward the employees’ demand to the concerned ministry/department with or without its own comments/recommendations.

The last time the pension update was given to the PSB employees was in 1996. The banks have created a pension corpus and the public sector banks are said to be holding a corpus that is worth around Rs 1,71,418 crore. The unions point out that if RBI, with a fraction of the corpus with PSBs can afford to accept the pension update, the government should have no difficulty in convincing the PSBs to follow suit too.

All eyes will be on the PMO on how it handles this demand from the public sector bank employees unions.

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