Fearing that allocation to staff welfare funds could get curtailed due to the likelihood of some public sector banks either posting a loss or a sharp decline in net profit for the second quarter on a trot, a bank employees’ union has sought the intervention of the Indian Banks’ Association to change the way the allocation is made.

The All-India Bank Employees’ Association (AIBEA) wants the allocation to the staff welfare fund to be calculated as a percentage of operating profit instead of net profit, subject to the maximum per year ceiling.

Explaining the logic for seeking this change, CH Venkatachalam, General Secretary of the Association, said: “With the Reserve Bank of India asking banks to provide for bad loans under its asset quality review exercise, many banks are likely to post a net loss even though they may record an operating profit.

“So, we have requested the Association to take operating profit as the basis for allocating staff welfare funds and not net profit for this year. Otherwise, most bank managements will say since there is no profit, there will be no allocation.”

He cautioned that curtailing allocation towards staff welfare will be extremely de-motivating for the employees, who are not at fault for the bad loans mess in the banking system.

The activities that are pursued by public sector banks under staff welfare include holiday home facility for existing and retired employees; scholarship to bright students of employees; health check-up facility; canteen subsidy; financial assistance to employees on leave on loss of pay on account of major ailments/surgery; financial assistance to the dependents of employees who die in harness.

The staff welfare fund for public sector banks (PSBs) is pegged at 3 per cent of net profit, subject to yearly ceiling. In the case of State Bank of India, the maximum yearly ceiling for staff welfare fund is ₹100 crore.

For PSBs with business mix (deposits plus advances) of over ₹3-lakh crore and employee strength of 30,000, the maximum yearly ceiling for staff welfare fund is ₹25 crore; for PSBs with business mix of ₹1.5-lakh crore to ₹3-lakh crore and employee strength of 20,000 to 30,000, it is ₹20 crore; and for other PSBs the amount is set at ₹15 crore.

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