Pension Parity

All India Regional Rural Bank Employees Association

Kolkata 52

Do. Letter No.-576                                                                                                                         Date- 04.06.2012


Respected Sir,


Sub:- Pension Parity   


1) The Financial parameter of the RRBs as per statistics published by NABARD as on 31.03.2012 is bright enough to take care of pension burden since there are only two RRBs with negative net worth. Financial improvements in other areas are given below:


“The owned funds of RRBs, comprising share capital, 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”.


The number of loss making RRBs decreased from 7 in 2010-11 to 4 during the current year. The combined losses posted by RRBs stood at Rs. 28.36 crore during the year as against Rs. 71.32 crore in the previous year.


The net profit earned by RRBs as a group totaled to Rs. 2442.23 crore during the year 2011-12 compared to Rs. 2349. 42 crore in previous year”. 


The aggregate accumulate losses in RRBs decreased from Rs. 1532.39 crore in the year 2010-2011 to Rs. 1104.85 crore in 2011-12”.


2) We are really shocked to find, Sir, that GOI has again moved the Hon’ble Division Bench of Karnataka & Rajasthan High Court with an appeal against the verdict of the respective High Court directing GOI to extend parity of pension. GOI has taken its plea in the appeal before Rajasthan High Court (Jodhpur Bench) that the RRBs have no “paying capacity”.


Hon’ble Supreme Court in its Judgment stated that:-

“ 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 India to reagitate the dispute, which has already been resolved and has been given effect to”.  


3) As recorded in the proceedings of the meeting held on 19th April, 2011 under the Chairmanship of Joint Secretary (BO) with NABARD and the General Managers of Sponsor Banks ‘ So far as grant of pension to employees of RRBs at par with nationalized banks is concerned, it was informed to the Sponsor Banks that in order to take a view in the matter, an actuary was appointed by NABARD to calculate financial implications. Actuary has submitted its report. The matter is being examined in consultation with Ministry of Labour. The banks were also informed that the cost of pension scheme will have to be shared by the stakeholders of the RRBs i.e. Central Govt. (50%), Sponsor Bank (35%), State Govt. (15%). The banks were of the view that in case of nationalized banks the employees have contributed to the pension fund; therefore the employees of RRBs should contribute”.


4) Subcommittee constituted by Govt. of India submitted their report on the liability of pension cost and other details in the last part of the year 2011 stated that:-


“After extending amortization facility of eight annual installments, 54 RRBs are assessed to be financially in a position to absorb the burden of pension parity at the current level of profitability”.


“Of the 28 remaining RRBs that are assessed to be not in a position to absorb even the amortized installment, 17 RRBs carry accumulated loss. The aggregate deficit of these 28 RRBs amounted to Rs. 2011 cr.”

“There could be two alternatives to meet the deficit of 28 RRBs”.

i)                    The shareholders contribute to the extent of their deficit in proportion to their shareholding.

ii)                  The employees of all RRBs contribute 30% of the deficit (around Rs. 2098 cr.) and the same is pooled together to meet the deficit of the 28 RRBs so that the issue of extending pension could be considered for all the RRBs. 

This report was never placed before us though there had been a series of meeting with us on this issue.


To make an end of the impasse, we suggest that GOI may officially discuss with the Apex Association for taking views and suggestions on the Govt. scheme on pension parity so that the Govt. order on pension parity for RRB staff may be issued in the month of June, 2012.


With regards

                                                                                                                        Yours faithfully


                                                                                                                                   Dilip Kumar Mukherjee

                                                                                                                                   Secretary General, AIRRBEA


Shri D. K. Mittal


Financial Services,

Ministry of Finance

Govt. of India,

New Delhi