Officers and workmen retired from nationalised banks and State Bank of India (SBI) are worried no action on ‘provision for pension updation’ is forthcoming even after 30 years of an agreement ‘with enabling provision.’ In Reserve Bank of India, however, the retiree pension was revised as per a circular dated March 7, 2019, which was followed up by another one dated July 13, 2023.

Centre’s stand

A Raghavan, Former General Secretary, State Banks’ Staff Union (Kerala Circle) and Deputy General Secretary, SBI Pensioners’ Association Kerala, said the Centre had gone on record saying there is no provision for updation of pension of employees of commercial banks. Bhagwat Karad, Minister of State for Finance, stated in Lok Sabha on July 31 that “pension, a funded scheme, was introduced in these banks through bipartite settlement on October 29, 1993, covering employees retired on or after January 1, 1986, between unions/associations of employees and Indian Banks’ Association (IBA), national body mandated to sign settlements with United Forum of Bank Unions (UFBU).

Dearness relief allowed

Boards of banks accordingly made Employees’ Pension Regulations, 1995, in exercise of powers under section 19 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980. “The regulations do not have provision for revision of pension. But pensioners/retirees of banks are granted dearness relief on pension, and increased from time to time. IBA has further informed that the matter of pension updation of banks is sub judice in the Supreme Court,” the Minister had said.

’Not financially viable’ 

IBA, vide affidavit on September, 2022, submitted in the Supreme Court said there is no provision for any pension updation. Therefore, it would neither be appropriate in principle nor would be financially viable to accept representation/claim for pension updation at par with Central employees, particularly when there is no parity between the two sets of employees. Pension in banks is paid out of pension funds created out of their contribution to PF whereas, in respect of Central employees, it is paid not out of pension fund but treated as revenue expenditure and paid out of budgetary allocation. 

RTI information 

Raghavan disagreed saying data available as per RTI documents shows funds of ₹3.5 lakh crore are available with banks as on March 31, 2022, to meet costs of updation. Pensioner associations point to related agreements signed on various occasions. A Memorandum of Settlement dated October 29, 1993, involving 58 banks and their workmen said: “During the course of negotiations… in February 1990, the IBA agreed to introduce a pension scheme for workmen employees in lieu of employers’ contribution to PF. It was to be broadly on Central Government/RBI pattern, details of which would be worked out.”

Proposed settlement

Clause 12 of the settlement between the parties to be signed by December 31, 1993, said “provision will be made by a scheme for applicability, qualifying service, amount of pension, payment of pension, commutation of pension, family pension, payment of pension, commutation of pension, family pension, updating and other general conditions, etc as are in force in Reserve Bank of India”.

A small committee consisting of representatives from IBA and major unions was formed to go into details of regulations covering applicability, qualifying service, amount of pension, payment of pension, commutation, family pension, updating and other general conditions. Terms of reference required it to formulate regulations to be adopted by individual banks for setting up a pension fund.

This was to be done on similar lines as RBI pension regulations and Central Civil Services (Pension Rules) by making suitable modifications in relation to applicability to the banking industry. The draft was accepted by the parties concerned. Clause 2 said the formula agreed for updation should be on the lines of the RBI scheme. Any change therein should be introduced only after mutual agreement.