Tuesday, September 21, 2010

CIRCULAR NO. 130 Dated 20.09.2010

We reproduce herewith the circular no130 dated 20.09.2010 issued by AIBOC for our viewers



In the Common Charter of Demands submitted to the IBA on 29th October 2007. by the four Officers’ Organisations in the Banking Industry viz AIBO, AIBOA, INBOC & NOBO, the following demands were raised.

i)To raise the retirement age of Officers in the Banking Industry from the present 60 to 65 years; and
ii).To change the date retirement of those born on the 1st of the month to the last day of the month of birth instead of last day of the previous month.

2. Due to paucity of time, on account of prolonged negotiations for new wage structure these demands could not be discussed and finalized before signing of the 9th Bipartite settlement. We have now addressed a letter to the Chairman IBA, the text of the same is reproduced here in under

3. We will keep you advised of the developments in the matter


NO: 1452/ 320/10 20th Sept. 2010

The Chairman
Indian Bank’s Association
Stadium House
6th Floor, Block 3,
Veer Nariman Road
Mumbai- 400 020

Dear Sir,


Please refer to the common Charter of Demands submitted to the IBA on the 29th October 2007 on behalf of four Officers’ Organisations in the Banking Industry viz. AIBOC, AIBOA, INBOC & NOBO, wherein the following demands have been raised:

(i) To raise the retirement age of Officers in the Banking Industry from the present 60 years to 65 years; and
(ii) To change the date of retirement of those born on the 1st of the month to the last day of the month of birth instead of last day of the previous month.

2. Due to paucity of time on account of prolongation of negotiations for new wage structure 2nd option on Pension etc. a number of important issues like the demand for regulated working hours, 5 day week, revision in staff loan schemes, improvements in the area of vigilance and disciplinary proceedings and the abovementioned issue of raising the retirement age effective date of retirement could not be discussed and finalized before signing of the 9th bipartite settlement. While we request you to direct the IBA team to resume discussions on these issues, there is an urgent need to consider our demand regarding raising the retirement age of the officers in the banking industry from 60 years to 65 years or at least upto 62 years immediately. In support of this important and genuine demand, we would like you to consider the following submissions: -

(i) In the worst ever global recession witnessed recently, public sector banks in our country provided a contrast with their excellent performance thereby silencing our detractors and faith of the general public in them has not only been redeemed but has been fortified;
(ii) Armed with technology upgradations and new business processes in place coupled with renewed faith of people in them, the PSBs are poised to grow and multiply their business at a much faster pace in the coming years;
(iii) The manpower planning in Banks has been absent for decades and recruitment of officers and employees has failed to keep pace with the growth of these banks;
(iv) There have been large scale retirement of the existing staff in the last few years and this position is likely to worsen further as employees recruited upto 1972-74 are all going to retire by 2011-12;
(v) The above factors have inevitably led to a huge shortage of manpower. As per a study conducted by Boston Consultancy Group, it is estimated that the PSBs shall need over 5 lakh employees over the next few years. The actual requirement will, in fact, be much higher;
(vi) It will be well nigh impossible to undertake and provide recruitment of such a massive magnitude keeping in view the low compensation package, general reluctance of quality personnel to come over to the banks due to long working hours, higher risks involved coupled with a draconian disciplinary and vigilance system. Moreover, the attrition rate among the new recruits in the banks is alarming;
(vii) Resultantly, there already is and will continue in greater measure an abject shortage of trained, skilled and experienced workforce particularly the Officers. To some extent, this shortage is being reduced by appointing officers on contract basis after retirement, which is fraught with risk;
(viii) The life expectancy in India has gone up considerably and employees are able to maintain good health and efficiency upto the age of 70-75 years. A number of retirees seek employment elsewhere mainly with our competitors. Thus, the experience and expertise gained by them by working in public sector comes handy to the financial institutions in the private sector;
(ix) A good chunk of new recruits after gaining experience in PSBs are quitting and joining the new generation private banks;
(x) It was for these reasons that, the recently appointed Khandelwal Committee was strongly of the view to raise the retirement age in the PSBs to 62 years. They had reportedly made a presentation to this effect before the media and others but somehow in their final report they refrained to make this much needed recommendation.

3. In the changed scenario, The Government of India has been permitting to raise the retirement age in certain sectors like education, health judiciary etc. This is required in equal measure in banks on account of the above stated compelling factors.

4. Hence, we reiterate our demand to raise the retirement age of bank officers across the board right upto top executive level, in the interest of progress and growth of Public Sector Banks, which are the backbone of our economy and for better utilization of talent and experience acquired by officers after working over 2-3 decades or more in the banks.

5. We shall be glad to have your positive response on our genuine demand in the interest of the PSBs, as well.

Thanking You,

Yours faithfully,


Saturday, September 18, 2010

PF interest rate hiked to 9.5%

In a pre-festival bonanza to 4.70 crore organised sector workers, the Employees Provident FundJustify Full Organisation(EPFO) on Wednesday raised the interest rate on retirement benefits by a percentage point to 9.5% for 2010-11.

The increase has taken the interest rate to a five-year high and has been made possible due to the surprise discovery of nearly Rs 1,700 crore in the suspense account. The interest rate for 2009-10 was 8.5%. The decision of the central board of trustees, headed by labour minister Mallikarjun Kharge, will be forwarded to the finance ministry for its notification. The 9.5% interest rate will result in an additional outgo of Rs 1,600 crore, which will be used from the surplus of Rs 1,731 crore in the interest suspense account of EPFO.

The surprise discovery in the suspense account was made when the board of trustees last year ordered a review of all EPF accounts since 1952. Kharge told reporters that the EPFO trustees had decided not to invest in the stock markets and would continue to follow the existing investment pattern. “We had received a letter from the finance ministry asking for parking of a portion of EPFO funds in the stock market. We have received huge opposition from CBT members who opposed the idea of investing in stock markets,” Kharge said.
The EPFO maintains a huge corpus of over Rs 300,000 crore, whereas all recognised PFs managed by it have accumulated funds to the tune of Rs 200,000 crore.
Deepankar Mukherjee, CITU national secretary who was part of the board decision, said this was a short-term measure but the government must ensure that workers get a higher interest given the fact that there is high inflation and funds are parked in government securities.
“The interest rate was as high as 12% not very long ago. It was brought down as the government felt inflation had come down substantially. Now that inflation is in double digits, it must announce an additional interest subsidy as stimulus,” Mukherjee said.

Between 1989-90 and 2000, the rate of interest on PF was 12%. It was reduced to 11% in July 2000 and thereafter the slide began. The reason for fall in interest rates was overall fall in interest rates in banks and lower inflation.

Minister of state for labour Harish Rawat clarified that the raise of an additional 1% is just for this year. Next year, the earnings of EPFO will determine the rates. “We found a surplus of Rs 1,731 crore in the suspense account and we put that before the CBT to decide,” the minister said.
In another important decision, the board of trustees decided to stop paying interest on “inoperative accounts”, thus reducing the interest burden on account of those who use this fund as an investment destination. “The accounts which are not operated for 36 months will stop getting interest,” he said.

D L Sachdev, AITUC national secretary, welcomed the decision, but said this was only a one-time security. “What the workers need is a long-term measure to be worked out and that is only possible with the government intervention,” he added.
The EPFO decision will also increase the bill of many corporates which run their own PF trusts as they will have to match the new rates announced on Wednesday.