Money & Banking

Banking services may be hit as RBI staff, officers plan two-day protest leave

Vinson Kurian THIRUVANANTHAPURAM | Updated on August 29, 2018 Published on August 29, 2018

Banking services, including the clearing and payment system, could be badly affected on September 4 and 5 when Reserve Bank of India staff and officers go on a mass casual leave.

The United Front of Reserve Bank Officers and Employees (UFRBOE) has given a call for the protest action against the Centre's refusal to accede to its long-pending demand for pension updation.

BUSINESS LOSSES

Cheque clearances, payments and settlements and forex transactions, real time gross settlement (RTGS) and national electronic funds transfer (NEFT) systems may also get hit.

If senior officers and the lower ranks keep away from work for two successive days, it could lead to business losses of tens of thousands of crores of rupees, a trade union source said.

This is “quite an unfortunate” situation that could be avoided if only the Ministry of Finance revises its recalcitrant approach to the pension updation demand or the courts intervenes in the public interest.

The protest action may also send the overnight call money market (market where banks borrow from each other to meet liquidity mismatches) into a tizzy with short-term rates fluctuating wildly.

It could also have a cascading impact on trading volumes of government bonds as well as rupee and dollar trade volumes, the source said. The entire workforce of the RBI across its 20 offices is expected to join action in support of the pension updation demand, leading to thin attendance and major interruptions in routine business.

PENSION CORPUS

“We have waited patiently for long and persuaded various authorities quietly and in a peaceful manner,” representatives of the UFRBOE said on Wednesday.

Successive RBI Governors and its central board have been sympathetic and have repeatedly taken up the pension updation issue with the Centre but to no avail, according to Samir Ghosh, Suryakanta Mahadik, Keshav Jagtap and Ajay Kumar Sinha of the UFRBOE.

RBI has a pension corpus fund of about Rs 16,000 crore, borne out of its contribution on account of employees’ provident fund. This is sufficient to defray the expenses of pension updation and one more option, without any cost to the exchequer, unlike in the case of Central Government retirees.

In 2011, RBI had formally requested the Centre to allow it to extend to its retirees one option for switching over to pension, in view of the improvements in pension regulations and wage revisions.

In 2014, RBI had formally proposed that the pension amount of old and suffering pensioners be improved, the UFRBOE leaders said. Last year, the Parliamentary Committee on Subordinate Legislation had unanimously recommended that RBI be allowed to extend one more option of pension.

'CONTAGION EFFECT'

It had termed the Centre’s conduct as ‘arbitrary’, ‘illegal’ and ‘whimsical’. RBI is within its powers to improve its pension scheme. The report was submitted to the Centre, but was returned.

In October 2017, the RBI Governor formally wrote to the Centre, quoting extensively from the report, that the central bank would like to improve pension and provide an option.

The Centre’s argument is that agreeing to RBI’s proposal will increase its expenses and give rise to a ‘contagion effect’, which is absolutely untenable, UFRBOE argued.

Firstly, the amount will be entirely borne by RBI from its own pension fund, whereas the Centre’s pension updation scheme for its pensioners is burdening the exchequer and adding to the fiscal deficit. Besides, the Centre had recently updated the pension of 25,000 professors and non-teaching staff of UGC sponsored universities.

It has also introduced pension for 94,000 serving and 55,000 CPSE retirees. Being the largest employer, it creates the contagion effect by itself by periodically updating the pension of its 55 lakh retirees.

Having given this benefit to its own pensioners, it cannot stand in the way of extending the same benefit to a few thousand RBI pensioners, the UFRBOE said.

Published on August 29, 2018
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