Pension Parity

All India Regional Rural Bank Employees Association Kolkata 52

Do. Letter No.-597 Date- 05.07.2012

Respected Sir,
Sub:- Pension Parity

I had been to your kind self on 20th June, 2012 evening. While accepting the parity of pension for RRB staff as available in the Banking Industry, during discussion you have observed that though pension parity would be available to all the staff of the RRBs, joined before 1st April, 2010 but the cash outflow for pension payment would not be allowed in the RRBs having accumulated loss /current loss till the concerned RRB wipes out the accumulated loss.

Capacity to pay
In my instant reaction I have informed your kind self that any disparity /distortion /discrimination in any related Govt. order /scheme would immediately attract the attention of highest judicial forum i.e. Honble Supreme Court which had rejected such discriminatory proposal/order on the plea of capacity to pay placed by GOI twice in the past (judgment 1996 ,2001 & 2002 related to RRBs).

Honble Supreme Court had categorically stated that :-
Moreover the question whether the financial viability would be the sole criterion in deciding the wage structure of the RRB employees was considered by the National Industrial Tribunal and the conclusion of the tribunal has become final, the award in question not having been assailed and on the other hand having been implemented. In the aforesaid premises, it is a futile attempt on the part of the employer as well as the Union of Indian to reagitate the dispute, which has already been resolved and has been given effect to.
To write off the accumulated loss against the share capital deposit of RRB :-
In the year 1993-94, while placing the budget, Dr. Monmohan Singh, the then Finance Minster, GOI allotted the capital support to the RRBs with the declaration that such capital support would cleanse the Balance sheet of the RRBs having accumulated loss. This was not done and amount of capital support was kept in share capital deposit.
The CRAR committee for RRB chaired by Dr. K.C. Chakrabarty, Deputy Governor, Reserve Bank of India recommended that:-
As per present practice, even the proposed recapitalization being recommended by this committee would be placed under share capital deposit. This presents a rather anomalous situation. As a onetime measure, therefore, the committee recommends that the RRBs be permitted to write off the accumulated losses as on 31st March, 2010 against the share capital deposit. Any balance amount left as share capital deposit may then be appropriated as paid up share capital. (para – 6.20)

GOI has approved the report of the CRAR committee but has not yet implemented this relevant part of the recommendation. This is to be implemented by GOI immediately.

Sl. No. Name of the RRBs Amount of accumulate loss (in lakh) Ant of Share capital Deposit
1 Arunachal Pradesh Rural Bank 4284.97 5169.04
2 Langpai Dehangi Gramin Bank 123.50 2994.12
3 Bihar Kshetriya Gramin Bank 2414.86 12485.23
4 Samastipur Kshetriya Gramin Bank 1629.00 5654.00
5 Ellaquai Dehati Bank 14030.00 18189.00
6 Jammu & Kashmir Grameen Bank 3235.00 6116.00
7 Vananchal Gramin Bank 3401.97 12749.93
8 Jhabua Dhar Kshetriya Gramin Bank 605.41 6831.51
9 Mahakaushal Kshetriay Gramin Bank 3829.00 4325.29
10 Maharashtra Gramin Bank 2591.56 19302.31
11 Wainganga Krishna Gramin Bank 2231.66 8583.40
12 Manipur Rural Bank 4115.95 2202.03
13 Nagaland Rural Bank 660.46 991.80
14 Baitarani Gramya Bank 2042.30 6320.18
15 Kalinga Gramya Bank 29866.00 27765.85
16 Utkal Gramya Bank 13198.38 32904.04
17 Mewar Aanchalik Gramin Bank 900.92 1447.45
18 Tripura Gramin Bank 330.83 264.61
19 Kshetriya Kisan Gramin Bank.Mainpuri 3345.42 3510.78
20 Bangiya Gramin Vikash Bank 29299.00 37380.22
21 Paschim Banga Gramin Bank 12170.00 4801.95
22 Uttarbanga Kshetriya Gramin Bank 519.00 5779.00

As per NABARDs published report as on 31.03.2012,
Out of 82 RRBs, there are only two RRBs having negative net worth and four RRBs having current loss. NABARD has observed that:-
The owned funds of RRBs, comprising share capital deposits and Reserves & Surpluses increased from Rs. 13839 crore as on 31st March, 2011 to Rs. 15892 crore as on 31st march, 2012 registering a growth of 14.83%. The increase in own funds has been primarily due to 78 RRBs reporting profit to the tune of Rs. 2468.59 crore during the year and receipt of recapitalization assistance to the tune of Rs. 1046.11 crore by 27 RRBs. 60 RRBs have completely wiped out their accumulated losses.

Additional Capital Support for future commitment against Pension Parity recommended by CRAR committee and approved by GOI.
The CRAR committee headed by Dr. K.C. Chakrabarty recommended and amount of Rs. 8892.36 crores towards wage revision, gratuity and leave encashment with the following observations.
The following recommendations are made in view of the impact of such expenditure or provisions on the profitability and sustainability of maintain a CRAR level of at least 9%. (para 4.10)

Immediately after the settlement and GOI decision, the RRBs would be necessary required to pay the revised salary scales including arrears irrespective of their financial health as per direction of Honble Supreme Court in the past. Keeping this in view and to ensure that the RRBs are not put to a sudden financial loss on account of making such payments, the committee accepts the recommendations of the Subcommittee to include the amount in respect of these items as additional provisions. (para 4.11)

In case of capital support for pension parity payment this CRAR committee has noted that:-
The committee also noted that a review of the existing PF/Pension scheme is being done as per advice of the GOI and NABARD has appointed an Actuary for assessing the financial requirement and financial gap, if any. The assessment is underway and hence, the committee has not made any assessment in this regard. The gratuity amounts may also undergo a change in future. (page 23 foot note 16 after para 4.11)

This is crystal clear as per recommendation of this CRAR committee, approved by GOI that any amount of further additional capital support, if required to maintain CRAR of few RRBs for payment of pension parity would be extended by GOI. There is no ambiguity in it.

We would request you to kindly ensure that the Govt. order /scheme on pension parity for RRB staff should be strictly at par with PSB staff in the Banking Industry as per Bipartite Settlement and must be uniform for all the staff working in all the RRBs irrespective of profit or loss as directed by Honble Supreme Court on 31.01.2001. We should not be forced to move Honble Supreme Court on the same issue of disparity again.

With regards Yours faithfully

Dilip Kumar Mukherjee
Secretary General, AIRRBEA

Shri D. K. Mittal
Secretary,
Financial Services,
Ministry of Finance,
Govt. of India

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