Tiny deposit collectors get a minimum wage hike

An award by the Central Government Industrial Tribunal, increasing the minimum fallback wages of tiny deposit collectors, could have financial implications for banks, especially those in the South.

The Tribunal has ruled that on a monthly collection of ₹3 lakh, a deposit collector should get fallback wages of ₹8,000 and conveyance of ₹750 a month.

The award will be applicable retrospectively from July 19, 2005, the date when the banks were summoned to appear before the Tribunal.

Currently, a deposit collector / agent gets fallback wages of ₹750 on a collection of ₹7,500 per month. For collections above ₹7,500/month, they get an incentive of 2 per cent of the amount collected.

In case a deposit collector mops up ₹3 lakh per month, he can take home only ₹6,600 (₹750 as fallback wages plus ₹5,850 as incentive remuneration).

While the minimum fallback wages have gone up, CD Josson, General Secretary, All-Kerala Bank Employees Federation, pointed out that the minimum deposit that the collectors have to mop up every month has also gone up steeply.

Moreover, in case a deposit collector fails to meet the minimum collection target consecutively for two quarters in a year, his contract with the bank is snapped.

In terms of the Tribunal award, on a monthly collection of over ₹3 lakh and up to ₹5 lakh, a deposit collector will earn an incentive of 3 per cent.

For example, if the collection is ₹4 lakh (₹3 lakh minimum monthly collection will earn the deposit collector ₹8,000 and ₹1 lakh extra collection will fetch ₹3,000 more), the total earnings of the collector will stand at ₹11,000.

For a monthly collection of over ₹5 lakh, a deposit collector will earn an incentive of 2 per cent.

So, if a collector mops up a minimum of ₹3 lakh a month (or ₹36 lakh/annum), a bank will have to pay him ₹1,09,000 a year (₹96,000 minimum fallback wages; ₹4,000 gratuity; and ₹9,000 conveyance allowance).

In the All-India Bank Deposit Collectors’ Federation (Ernakulam) and All-India Bank Deposit Collectors Workmen Union (Mysore) versus Indian Banks’ Association case, the Tribunal’s Presiding Officer ordered that deposit collectors operating in areas classified ‘A’, ‘B’, and ‘C’ would collect at least ₹3 lakh, ₹4 lakh and ₹5 lakh a month, respectively.

The collectors can meet the target every month or may collect a sum of ₹9 lakh, ₹12 lakh and ₹15 lakh, respectively, on March 31, June 30, September 30 and December 31 every year.

The tiny (‘pigmy’) deposit scheme was pioneered by Syndicate Bank in 1928. The public sector bank has been collecting deposits as low as ₹5 a day from the doorsteps of depositors through its ‘pigmy’ agents.

Deposit collectors tap lower- and middle-income group, small traders, businessmen, artisans, self-employed persons and housewives.

Besides Syndicate Bank, some of the other banks that have tiny deposit schemes include Vijaya Bank, Indian Bank, and UCO Bank.

COMMENT NOW