Tuesday, June 30, 2015

Bank Trade Union Leaders Opt For NO Levy

The Massage of Comrade GV Manimaran Gen Secy Of Canara Bank Officers' Association to all the Comrades on LEVY.......

Mother of all Surprises

When we are basking in the glory of unprecedented rental increase, here comes the "Mother of all Surprises"


Our GS Sri. Manimaran's decision not to charge levy from the members on the 10th Bipartite arrears is not only unprecedented but Historic in every sense of the term.

Never In the history of any trade union such a decision is taken. It shows not only complete transparency in the organisation but also faith in the membership.

Friends, a few days back some of our members thought of giving letter to the Bank not to take levy from their arrears, getting confused by a trade union who decided to charge 4% levy from its members! Then our GS has left the decision to the members who overwhelmingly come forward to contribute!

But our GS has something in his mind and he has been indicating of some surprise!

Here comes the Biggest surprise !

Imagine friends when some other trade unions have become greedy and collecting huge levy, here is a leader who tells his members that he is comfortable with his funds and forego the levy that too when the organisation is in the midst of conducting hundreds of activities regularly and especially through CANPAL.

The decision of not collecting Levy is something extraordinary and simply great and Sri. G V Manimaran deserves all the kudos for this bold and historic decision.

Jagadeesh JS
Central Liaison
Ranvir Malik Writes on Sick Bank
UPA in 10 years of it's misrule gave us "SICK COMPANIES but no defaulting promoter was labelled "SICK PROMOTER". Default to repay on the part of major business houses is many times more than the Income Tax deparyment contributes towards GDP. The article below is an eye opener

"The total write-offs of loans made by the commercial banks in the last five years is Rs. 1,61,018 crore, which is 1.27 pe...
r cent of the GDP," said Mr Raghuraman Rajan. "1.27 per cent of GDP would have allowed 1.5 million people to send their children to get a full university degree from the top private universities in the country, with all expenses paid. That's the size of the write-offs that we are talking about."

India's banks confirmed worrying trend: of total loans of Rs. 63 lakh crore, non-performing assets (NPA) or defaulted loans stood at 4 per cent. Restructured loans make another 5 per cent and along with stressed loans (repayments due for more than 30 days), the amount of bad debt in the economy was Rs. 14 lakh crore, about 20 per cent of all advances.

Lanco, which announced 11 power projects in that period, has an outstanding debt estimated at around Rs. 36,000 crore. Such a scorching pace of expansion resulted in huge amounts of debt on the books of every major infrastructure player: Adani (Rs. 81,000 crore), Ambani (Rs. 1.13 lakh crore), Jaypee (Rs. 63,000 crore), Essar (Rs.98,000 crore) and so on. The debt estimates are from a 2013 report by the Swiss asset management company, Credit Suisse.

Between 2007-2013, as the debt of Essar Group's power subsidiary shot up from Rs. 15,000 crore to Rs. 52,000 crore, so did the debt in the rest of the company's verticals - rising from Rs. 10,000 crore to Rs. 46,000 crore - according to Credit Suisse estimates.

RBI Governor Raghuram Rajan has warned against this vicious cycle. In a speech in November last year at the Institute of Rural Management Anand (IRMA) in Gujarat, he said, "Too many large borrowers insist on their divine right to stay in control despite their unwillingness to put in new money. The firm and its many workers, as well as past bank loans, are the hostages in this game of chicken - the promoter threatens to run the enterprise into the ground unless the government, banks, and regulators make the concessions that are necessary to keep it alive. And if the enterprise regains health, the promoter retains all the upside, forgetting the help he got from the government or the banks - after all, banks should be happy they got some of their money back! No wonder government ministers worry about a country where we have many sick companies but no 'sick' promoters."
CVC recommends prosecution of two EXIM bank officials-DNA
The Central Vigilance Commission has recommended prosecution of two senior executives of Export Import Bank of India (EXIM bank), the country's premier export finance institution, for their alleged involvement in a corruption case being probed by the CBI.

The Commission advised issuance of sanction for prosecution in respect of two officials last month, it said in its monthly performance report.

The CBI had sought sanction to prosecute the officials, who are now working at the level of Chief General Manager and Assistant General Manager, for their alleged involvement in a corruption case. The CVC has approved the agency's request and asked the bank to give approval to prosecute the two, a senior CVC official said.

The probity watchdog has also advised major penalty against 107 officials, including 16 working with Bank of India, 11 in Oriental bank of Commerce and ten in Punjab National Bank, the CVC said.

Besides, CVC has also advised slapping major penalties on seven officials each of Canara Bank and Central Board of Excise and Customs, six each of Bank of Baroda, State Bank of Bikaner and Jaipur, Railway Ministry, Delhi Development Authority and HMT Ltd, and five officials each in Central Bank of India and Corporation Bank.

The Commission had processed 2,009 complaints (including 50 whistle blower complaints) last month and sought investigation report in six complaints from the concerned ministries, the report said. It effected recovery of Rs 1.71 crore during May after conducting technical examination of procurement and other works done by ten government departments, the Commission said.

It is reported in newspaper Today that United Bank of India has been placed at Top in the list of banks having more stressed assets compared to their total advances and in comparison to private banks

If a person read news about banks regularly , he is aware that banks like State Bank of India, Punjab National Bank, Bank of Baroda, Bank of India, Union Bank, Oriental bank are considered as stronger banks whereas banks like United Bank of India, Central Bank of India , Uco bank, Indian Bank, Dena Bank, Vijya Bank are considered as weaker bank. Even two to three decades ago, banks like United Bank of India, UCo Bank, Indian banks were considered as weak bank and were on the verge of merger with so called stronger banks.

Government of India has been making promising year after year and quarter after quarter that health of public sector banks is good and regulating agencies like RBI and Ministry of Finance is closely watching the performance of these banks. As a matter of fact , actual health of these banks never improved by virtue of any change in policy or change in controlling offices. It is the art of manipulation which helps some banks to show good performance in some quarters and bad performance in some other quarters. Some of Chiefs are purely looters and some are less looters. Some banks have been exploited by politicians to greater extent and some are to lesser extent due to some reason or the other. Some of Chief are blind flatterer of Ministers and some are less Yesman. In fact there is no improvement in work culture and no change in attitude of politicians in using bank for vote purpose.

Unfortunately , Government of India has never taken any step to improve the health of PSU banks. On the contrary , ruling party has always tried to exploit these banks for political advantage. Sometimes they prescribe Loan Mela for growth of bank and sometimes they build pressure for write off of bad loans. Sometimes they build pressure on banks for priority sector lending and sometimes for lending for growth in infrastructure in the country. Sometimes the prescribe brainless expansion of branch network or ATM network and sometimes they ask for opening of accounts or doing insurance business.

It is they who have damaged the banking culture from grass root level and injected corruption and malpractices in PSU banks. It is they who use banks to garner votes and then it is they only who accuse banks for lesser profit compared to banks. When Financials of PSU banks reflect signs of weakness compared to peer private banks, they prescribe certain change in policy or change in Chief of banks, but dirty culture of exploitation of bank never stops.

Due to continuous exploitation of PSU banks by politicians , health of these banks have consistently moved from good to bad and bad to worse. GOI has to provide capital support from time to time. Even then the health of banks do not appear to be improving, rather it is deteriorating quarter after quarter. Volume of stressed assets in weakest bank United Bank is reported to be 21.5% and that in strongest bank SBI is more than 15%. This is the statistics which is published by these banks and which is accepted by RBI too.

If correct assessment of quality of assets of all PSU banks is done by an unbiased agency without any fear of repercussion or punitive action, I am very much sure that volume of stressed assets will be around 50 percent of total advances or approaching it.

And the matter of concern is that no concrete step has been taken by any agency to stop this uptrend in stressed assets. Quality of lending has not improved. Quality of workforce promoted to higher level is not based on ability to perform or based on seniority and experience but purely based on flattery and bribery. Similarly quality of recruitment in PSU banks has faced erosion year after year during the regime of reformation launched since 1991. So called merit oriented promotion policy or recruitment set up has failed to ensure merit at any level, rather it has promoted demerit.

Obviously , on the one hand banks are appearing to recover bad loan , on the other they are adding many more times of it as new bad loan. They are unable to control loss caused by frauds and stressed assets. It is all because neither management of banks are honestly doing corrective and reformative work, nor are government officials or ministers taking any concrete step to stop further deterioration in quality of assets and quality of work force.

Unless and until there is change in culture and mindset of people who work in bank and who monitor and regulate them ,there is no hope for improvement in health of ailing PSU banks. GOI will have to decide whether banks are to be used as tool to fulfil social objective or to be left free to earn profit and profit only. Similarly , bank officials have to decide whether they are meant to serve their organisation or they are to served their bosses and bosses only.

United Bank of India tops list with highest bad loans among PSUs -Hindu Business Line--29th June 2015

United Bank of India has topped the list of public sector lenders with maximum bad loans including restructured assets as a percentage of total advances.

According to the data provided by the RBI to the Finance Ministry, United Bank of India’s 21.5 per cent assets are either bad or have been restructured to save them from turning non-performing assets (NPAs).
The other banks that have significant amount of gross NPAs and restructured loans include, Central Bank of India (21.30 per cent), Indian Overseas Bank (19.40 per cent), Punjab & Sind Bank (18.74 per cent) and Punjab National Bank with 17.94 per cent as on March 2015.
State Bank of Patiala, Allahabad Bank, Oriental Bank of Commerce, UCO Bank and Dena Bank all have bad and restructured loans in excess of 15 per cent.
The rising bad loans have been a major concern for the Reserve Bank as well as the government and steps are being taken to deal with it.
Most of the restructured loans are from the corporate sector. The top-30 defaulters are sitting on bad loans of Rs 93,769 crore, which is more than one-third of the gross non-performing assets of PSU banks at Rs 2,55,180 crore as on March 2015.
There are four kinds of restructuring. The first and foremost is restructuring of advances extended to industrial units, restructuring under Corporate Debt Restructuring and restructuring of loans extended to MSME as per RBI guidelines.
However, banks have their own operational rule for restructuring of small loans.
The RBI has not prescribed any board or bank level position at which these loans need to be approved

Saturday, June 27, 2015

News On Saturday Off, Stagnation Increment And Pension

Saturday off for banks from July 25-Hindu Business Line-27th June 2015
Mumbai, June 26:  
The first Saturday off for banks in India will kick in from July 25, a fourth Saturday.
This is as per a government notification declaring second and fourth Saturdays closed for banks
RBI has cleared and sent their approval for implentation of 2nd and 4th saturday off to IBA from 15th July. IBA is vigorously following up for issuance of notification to this effect. It may take time as DFS will have to get the notification vetted from Law Ministry. In all probabilities 4th saturday of July will be off in the Banking Industry. Harvinder Singh, General Secretary,AIBOC

IBA clarifies on Stagnation Increment under 10th Bank Wage Settlement for Bank Employees
Indian Bank’s Association

HR & Industrial Relations

No. CIR/HR&IR/XBPS/KU/919...

June 16, 2015

Designation Officers of Banks which are parties to the 10th Bipartite Settlement/Workmen Union dated 25.5.2016

Dear Sir,
Stagnation Increment

Under the recently signed 10th Bipartite Settlement, it has been agreed that employees shall be eligible for 8th stagnation increment on 1st May, 2015 or two years after receiving stagnation increment, whichever is later.

It has been further agreed that the period of 3 years shall be reduced to 2 years for sanction of 6th stagnation increment. Accordingly it has bee provided in the Settlement that an employee who has completed two years or more after receiving the fifth stagnation increment as on 1st November, 2012 shall receive the sixth stagnation increment as on 1st November, 2012.

In this connection, we advise that the financial benefit on account of this reduction of eligibility from 3 to 2 years for sanction of the 6th stagnation increment shall accrue on or after 1.5.2015 since the additional cost of such reduction in periodicity from 3 to 2 years has been adjusted at 50% of the actual cost and hence to be effective from 1.5.2015 (30 months out of 60 months of the period of the Settlement).

However under clause 40 of the settlement dated 25.5.2015 in ‘Implementation’ it has inadvertently mentioned as under:-
3 Stagnation Increment – 8th 1st May, 2015

In view of the adjustment of cost as 50% of the total cost towards improvements in stagnation increment/s this needs to be corrected and read as under:
3 Stagnation Increment improvements (5th to 6th & 7th to 8th Stagnation increment) 1st May, 2015

Member banks may kindly take a note of the above.

Yours faithfully,

K. Unnikrishnan
Dy. Chief Executive

W. P. (C) NO.______OF 2015

Central Bank Retirees Grievances
Cell “Kasht-Haran” & Anr. …Petitioners

Ministry of Finance & Ors. …Respondents



1. That the petitioner is filing the writ petition under Article 226 and 227 of the Constitution of India for issuance of writ of certiorari, mandamus or any other appropriate writ, rule, order or direction for updation of Pension of Bank Retirees.
2. That the petitioner is a Trust created to help the Bank Retirees and to pursue the legal remedies to the grievances of the Bank Retirees through its Chairman Sh. Som Prakash Srivastava who himself is a Bank Retiree from Central Bank of India.
3. That the respondent No.1 i.e. Ministry of Finance is having overall control and policy making Government Authority hence respondent No.1 is a necessary party herein. The respondent No.2 i.e. Reserve Bank of India (RBI) is an authority to make rules and regulations guiding all the Nationalized Banks of the country. All the rules and regulations framed for the Nationalized Banks are formulated with due consultation and approval of the RBI, thus, the same is also necessary party herein. The respondent No.3 i.e. Indian Banks Association (IBA) is an association of all Nationalized and other Banks and is an empowered body to negotiate, settle and represent on their behalf. IBA is instrumental for formulation of rules, regulations and policies in the banking industry. Since IBA represents all Nationalized Banks and acts in the representative capacity, instead of making all the nationalized banks party to the case, the petitioner chose to implead the IBA only.
Further, it may be noted that as per Section 19 of the Banking Companies (Acquisition and Transfer of Undertakings ) Act, 1970, all rules & regulations framed require consultation by RBI and previous sanction of the Central Govt.
4. That the brief facts of the case are as follows: a Settlement dated 29.10.1993 between Bank Employees Representatives and Bank Management represented by IBA was arrived at for the pension related issues of the bank employees. As a result, the Bank Employees Pensions Regulations, 1995 came into existence and it was made enforceable w.e.f. 29.09.1995 when the due Notification was issued. Initially the said regulation covered only those Bank Employees who retired after 01.11.1993. However, later on, it was extended to the employees retired from 01.01.1986 onwards. A copy of Settlement dated 29.10.1993 is placed on record and marked as ANNEXURE P-1. In view of the said Settlement all the Banks framed Pensions Regulations 1995. They are almost all similar and hence a copy of one Bank namely Central Bank Employees Pension Regulation, 1995 is placed on record and marked as ANNEXURE P-2.
5. That the Banks framed Pensions Regulations, 1995 consists of three components (a) Basic Pension (b) Dearness Allowance & (c) one time payment of commutation on optional basis. Revision or Resettling of basic pension is a universal phenomenon. Basic Pension linked to basic pay has always been subject to revision corresponding to the revision of basic pay time to time. The basic pension should necessarily be updated to the wages/salary settlement in the banking industry. Unfortunately no updation has been carried out since the inception of the pension scheme to the bank retirees. Rather, unjustified categories of passed retirees and recent retirees have further added to the discrimination of that basis imparted by respondent No.3 on that basis.
6. That the respondent No.3 has compartmentalized the retired personnel without any justification and has allowed discrimination in the payment of basic pension and DA. The Dearness Allowance linked with consumer price index, given to the pensioners is also subject to discrimination. The bank retirees between 01.01.1986 and 31.03.2002 do not get 100% DA while others are paid 100% DA. Such discrimination is patently illegal as all are affected in the similar manner due to inflation. All the pensioners of Govt. service and that of RBI get 100% DA. This discriminatory action of banks is also contrary to the Clause-6 of the Settlement dated 29.10.1993 which is as follows:-
“6. Dearness relief to pensioners will be granted at such rates as may be determined from time to time in line with the dearness allowance formula in operation in RBI.”
7. That it is pertinent to note herein that after the Regulation, 1995, initially around 40% of the bank employees opted for pension as that was not considered beneficial by the bank employees. Gradually, when the employees became aware of the correct position of the scheme, the Unions/Associations of the bank employees kept on insisting to open yet another opportunity to opt for pension. In the 9th Settlement the Unions/Associations successfully brought another opportunity to opt for pension and resultantly, now around 98% bank retirees have opted for their pension. Due to the said situation, though the updation of basic pension has always been in the agenda, the same was never strongly agitated by the representatives of the bank employees and bank retirees. And the Banks kept on their discriminatory mechanism of computation of non updated basic pension alongwith D.A. discriminately.
8. That the Bank Retirees have broadly been kept in three categories:
i. Pre 1986 retirees whose basic component is ex-gratia drawn by them.
ii. Pensioners who retired between 01.01.1986 and 31.10.1992 draw basic pension upto Rs. 1250/-
iii. Pensioners who retired between 01.11.1992 upto 31.03.1998 draw basic pension upto Rs. 2400/-
iv. Pensioners who retired between 01.04.1998 to 31.03.02 draw basic pension upto Rs. 3550/-
This basic pension which should be revised as per increment in the pay scales as has been carried out in all Govt. Deptt./organization has remained stagmant to the Bank retirees.
9. That first of all updation of pension need not to be mentioned in the Regulation but is implied as the same need to be updated as per increase in the corresponding pay scales and salaries time to time. Secondly, it is patently against the spirit of Settlement dated 29.10.1993 that the updation clause was not inserted exclusively in the Regulations, 1995.
10. That the definition and scope of the term “Pension” itself includes:
a. different types of pensions, including family pension,
b. commutation of pension,
c. restoration of commuted pension,
d. suspension of pension,
e. withholding of pension,
f. withdrawal of pension,
g. forfeiture of pension,
h. updation of pension,
i. dearness relief on pension,
j. and so on and on.
Thus, the updation of pension is inherent and implied in the Scheme of Pension itself.
11. That notably as per clause-12 of the Pension Settlement dated 29.10.1993, provisions of the Regulation were required to be made by a Scheme through negotiation and settlement between the parties for applicability, qualifying service, amount of pension, payment of pension, commutation of pension, family pension, updating and other general conditions etc. on the lines of as are in the force in RBI.
12. That the consequence of the said omission of updation of pension is that the officers of the Rank of Chairman, Gen. Manager, Deputy Gen. Manager are getting their pension less than even to the Clerk & Peon of the Bank. One Sh. R.R. Kumar, Ex-Chairman, pre 1986 retiree, gets only Rs. 3000/- as pension. Following chart is indicative of the consequence of non updation of pension of Bank Retirees.

R.R. Kumar Chairman Pre 1986 3000
D.M. Tondon 2/Officer 31.07.1993 4357
A.C. Sharma 3/Officer 30.11.1996 5258
M.L. Pandey 2/Officer 31.05.1999 4945
S.P. Chaudhary 2/Officer 30.04.1998 4945
B.K. Chaturvedi 2/Officer 30.11.1986 1462
P.N. Kakkar 3/Officer 31.10.1993 6926
R.B. Dubey 4/Officer 31.12.1992 2775

Thus, it shows as to how the officers of the Bank are getting minimal pension.
13. That Regulations, 1995 was framed and updation of pension stands to be implied in the same as that was the part of said settlement. “Other General Conditions etc.” of Clause-12 of the Regulations, 1995 did not exclusively mentioned updation of pension while it introduced all other aspects like suspension of pension, withholding of pension, withdrawal of pension, forfeiture of pension etc. as mentioned in the settlement.

14. That the demand of updation of basic pension has been denied by the IBA on the ground of the cost of updation of pension. This is totally unjustified and misleading.
15. That the Bank Retirees totally depended upon Bank Employees Association for ventilation of their grievances. The said issue was raised by them time and again but unfortunately it was never fructified. The charter of Demands dated 30.10.2012 presented to the Chairman of I.B.A. by five Bank Employees Associations/Federation raised the issue of updation of pension of Bank Retirees vide Sl. No. 22 which reads as under:
▪ LFC and Hospitalization reimbursement should be extended to retired bank employees.
▪ Insurance cover to be provided.
▪ Ex-gratia to pre 1986 retirees/widows to be revised.
▪ Pension updation alongwith wage revision of service employees, revising the Basic Pension of all past retirees to the index point under 10th BPS, uniform rate of DA for all pensioners and removal of slab DA system for past retirees, improvement in family pension etc. on the lines of the Government/RBI Scheme.
▪ The percentage of allocation towards welfare schemes of retirees should be uniformly defined.”
16. That a Joint Note dated 27.04.2010 of the Negotiating Committee of IBA and authorised representatives of the officers Associations on salary revision and other issues concerning service conditions for bank officers. Amongst other issues, the issue of extending another option to those bank retirees who could not opt for pension was agreed to. The revision of pension of all Bank Retirees were not considered. A charger of demands dated 30.10.2012 was presented to the Chairman, IBA by several Bank employees Unions/Associations/Federation jointly. It categorically raised the issue of updation of pension vide Sl. No. 22 which is as follows:
United front of Bank Unions raised the following issues in the meeting held on 14.03.2014 with IBA.
a. Uniform D.A. to all pensioners
b. Improvement in family pension on the lines of RBI and
c. Updation of basic pension.
All India Bank Retirees Federation (AIBRF) also represented on 19.01.2015 to the IBA and raised following issues:
(1) Uniform dearness relief to all pensioners
(2) Pension updation of past retirees
(3) Improvement of family pension
(4) Uniform hospitalization scheme for retirees
(5) Pension option to left over past retirees.
Further All India Bank Officers Association also raised pension related issues vide letter dated 06.02.2015 and specifically raised following issues:
(a) Family Pension- increase to 30% as in the case of RBI;
(b) Updation of pension
(c) 100% D A to retirees w.e.f. 01.11.2002
(d) Hospitalization scheme as available to serving employees.
17. That despite aforesaid representations and demands raised by different associations/unions of bank employees, the minutes of the discussions held on 23/02/2015 between IBA and Workmen Unions/Officers Associations have again left out the pension related issues. A copy of the said minutes dated 23/02/2015 is placed on record and marked as ANNEXURE-P-
18. That aforesaid facts clearly shows that neither the Unons/Associtations, nor IBA nor the Government is serious about the genuine, bonafide and legitimate demand of the bank retirees who are feeling totally helpless. They have been left with no option but to file the present petition and seeking indulgence of the Hon’ble Court for ventilation of their genuine grievances.

24. That in the aforesaid facts and circumstances, the present writ petition is being filed on the following amongst other grounds:-


Friday, June 26, 2015

Asset Quality In Banks

Date : Jun 25, 2015
Indian Economy Resilient but No Room for Complacency: Says RBI’s June 2015 Financial Stability Report
The Reserve Bank of India today released the Financial Stability Report (FSR) June 2015, the eleventh issue of its half yearly publication.

The FSR reflects the collective assessment of the Sub-Committee of the Financial Stability and Development Council (FSDC) on risks to financial stability, as also the resilience of the financial system. Besides, the Report discusses issues relating to development and regulation of the financial sector.

Global environment

Global economic recovery still seems to be far from being self-sustaining even as spill-overs from the monetary policy stance in advanced economies (AEs) are increasing the challenges for emerging market and developing economies (EMDEs). Developments on the Greek debt crisis front and uncertainty over the timing of rate increases by the US Federal Reserve remain immediate possible triggers for global financial market volatility.

On domestic front

On the domestic front, there has been significant improvement in the macroeconomic environment and going forward, economic performance is expected to be better. External vulnerability has reduced and progress has been made with regard to fiscal consolidation. While foreign portfolio flows to India have been strong during the past year, unexpected changes in AE monetary policy may lead to slowdown/reversal of such flows with implications for segments of financial markets. India is though better prepared to deal with the volatility, as compared to previous episodes.

Banking sector

While risks to the banking sector, as reflected by the Banking Stability Indicator and Map, have moderated marginally since September 2014, concerns remain over the continued weakness in asset quality indicated by the rising trend in stressed advances ratio of scheduled commercial banks (SCBs), especially of public sector banks (PSBs).

Macro stress tests suggest that current deterioration in the asset quality of SCBs may continue for few more quarters, and PSBs may have to bolster their provisions for credit risk from present levels, to meet the ‘expected losses’ if macroeconomic environment were to deteriorate under assumed stress scenarios.

However, capital to risk weighted assets ratio (CRAR) of SCBs, at system level, was observed to remain above the regulatory minimum even under adverse macro-economic conditions assumed in these tests.

The falling profit margins and decreasing debt repayment capabilities of the corporate sector add to these concerns, though overall leverage level in Indian economy is comfortable when compared to other jurisdictions.

While the regulatory move towards encouraging greater market access and market discipline will help the development of domestic financial markets, the banking sector, especially the PSBs will be expected to continue to shoulder the needs of the accelerating growth in the economy. In this context, the policy initiatives for improving the governance and management processes at public sector banks become significant.

Securities and commodities markets

The concerns emanating from rapid rise in algorithm trading in recent years highlight the need for caution for India’s securities markets, while measures have been taken to address the same. Significant steps have been taken to tighten the regulations dealing with illegal money-raising activities and insider trading, and also to strengthen the risk management systems at depositories.

The agricultural insurance needs urgent focus in the wake of frequent episodes of weather related calamities and their impact, particularly on small and marginal farmers. On the other hand, there is a need to harmonise the regulation of physical commodities market and strengthening the linkages between the derivatives markets and physical (cash) markets, mainly in agricultural commodities.

The expected shifts in demography in coming decades call for attention on old age income security and pension schemes, especially in the case of unorganised sector for which a new scheme has been announced by the union government.

To conclude

Overall, India’s relatively stronger macroeconomic fundamentals in terms of growth, inflation, current account and fiscal deficits provide a reasonable degree of resilience to Indian financial system in the event of spill-over effects from global factors. However, with the continued uncertainty over global growth and in the absence of effective international monetary policy coordination, there can be no room for complacency.

Alpana Killawala
Principal Chief General Manager

Banks to feel the heat of bad loans for some more time, cautions RBI report-Hindu Business Line

The deterioration in the asset quality of scheduled commercial banks may continue for a few more quarters, a report by the Reserve Bank of India’s financial stability unit has warned.
Stressed advances are continuing to show a rising trend and though risks to the banking sector have moderated marginally in the second half of 2014-15, concerns remain over the continued weakness in asset quality and profitability, says the half-yearly Financial Stability Report released by the RBI on Thursday.
Just two sectors — power generation and iron and steel — account for over a quarter of the stressed loans though together they account for just 12.8 per cent of total advances.
The report, based on macro stress tests of 148 scheduled commercial banks as of March 2015, cautions that further shocks to the infrastructure sector would significantly affect the banking system.
Falling profit margins and decreasing debt repayment capabilities of the corporate sector add to the concern, although the overall leverage level in the Indian economy is comfortable compared with other countries.
The gross non-performing assets (GNPA) ratio of commercial banks, which was 4.6 per cent in March 2015, could deteriorate to 4.8 per cent by September 2015 in the baseline (least stress) scenario and improve to 4.7 per cent by March 2016. However, if the macroeconomic conditions deteriorate, then the GNPA ratio could rise to 5.9 per cent by March 2016, the Report warns.
Restructured standard advances (RSAs) during the six-month period from September-end 2014 to March-end 2015 also increased, pushing up banks’ stressed advances (GNPAs plus RSAs) to 11.1 per cent of total advances from 10.7 per cent.
Public sector banks recorded the highest level of stressed advances at 13.5 per cent of total advances as of March 2015 compared with 4.6 per cent in the case of private sector banks.
The report observed that public sector banks may have to bolster their provisions for credit risks from the present levels to meet the ‘expected losses’ if the macroeconomic environment deteriorates further under assumed stress scenarios. Expected losses is the average credit loss that the banking system expects from its credit exposure.
Power sector caution

The report said the debt servicing ability of power-generation companies in the near term may continue to remain weak given the high leverage and weak cash flows. Banks, therefore, need to exercise adequate caution while dealing with the power sector and need to continue monitoring developments very closely.
This observation comes despite the government improving potential domestic supply through the auction of coal blocks and fixing the gas price to improve power generation.
RBI wants public sector banks to improve efficiency -Business Line 25.06.2015
As capital infusion for public sector banks (PSBs) by the government is also about committing tax payers’ money, the RBI said this calls for enhanced efficiency and capital conservation rather than an equitable distribution of scarce capital.
On the other hand, while there is no dispute over the need for buffering banks with adequate capital, this may not ensure asset quality and hence the overall strength of the balance sheet.
The RBI’s observation comes in the backdrop of the government capitalising only nine out of 22 PSBs in FY2015 on the basis of their return on assets and return of equity.
Chiefs of PSBs, which did not receive capital, termed this select infusion as a bolt from the blue. Given that their share valuations are currently not attractive for them to tap the equity market, the government now seems to be having a re-think on its strategy of select capital infusion.
The Financial Stability Report (FSR) observed that a reorientation of the performance evaluation of the top management (chief executives) of PSBs to specifically incorporate stock market valuations will reduce ‘principal-agent’ problems inherent in such a relationship and will also reflect the true marginal cost of capital relevant for recapitalisation.
The ‘principal-agent’ problems occur when one person/ entity (the agent) makes decision on behalf of or that impact another person/ entity (the principal).
The report pointed out that in terms of public perception PSBs, with implicit government support, are considered to be relatively immune to destabilising impact though it has an efficiency imperative, when judged by their returns on asset or capital employed.
However, the same sense of safety eludes PSBs when it comes to their valuations.
“With the government thinking of new performance-based norms for capital infusion, this disconnect is sought to be addressed.
“There may be a notion, albeit an incomplete one, that with the government deciding on performance-based parameters for identifying banks which deserve fiscal support, those that are not up to the mark might find it even more difficult to raise capital,” the FSR said.

Thursday, June 25, 2015

Good News For Retired And Retiring Employees

AIBEA Circular - 10th BP Settlement and Gratuity
Circular No.27/136/2015/32 date 25.06.2015

Dear Comrades,

10th BP Settlement and Gratuity

References are being made to us regarding Gratuity under the 10th BP Settlement signed recently on 25-5-2015. Gratuity in the Banks is payable to employees and officers both under the Gratuity Act, 1972 as well as under the provisions of our Bipartite Settlement for employees and as per OSR for officers whichever is higher. ( other than in SBI where Gratuity is paid only under the Act with a ceiling of Rs. 10 lacs )

Eligibility :

As per Bipartite Settlement

As per Gratuity Act
On retirement on superannuationOn retirement on superannuation
On resignation after 10 years’ serviceOn resignation after 5 years’ service
On termination of service On disablement
On becoming incapacitatedOn death of an employee
On the death of an employee

Eligible Amount:

As per Bipartite Settlement

As per Gratuity Act
One month Pay for each completed year of service (Max. 15 months) plus half month Pay for each year beyond 30 years’ service ( No maximum)
Pay means Basic pay, Spl. Pay, Offg. Pay, PQP, increment portion of FPP.
15 Days wage x No. of years of service ( Max. Rs. 10 lacs)
Wage means Basic Pay, Spl. Pay, Spl. Allowance, PQP, Offg. Pay, DA, Increment portion of FPP.
1 day = monthly wage/26 days


1. In terms of Section 4 (5) of the Payment of Gratuity Act, 1972, Gratuity under Gratuity Act or BPS provisions whichever is higher is payable.

2. Hence for every retiring employee, Gratuity has to be calculated both under the Act and under BPS and higher of the two will be paid.

3. For those employees who have retired from November, 2012, Gratuity will be re-calculated both under the Act and as per 10th BPS and arrears/difference if any will be paid to them.


a) A Special Assistant (Graduate and CAIIB) with 8 Stagnation Increments and retiring in July, 2015 after 40 years’ service

Eligibility as per the Act

Eligibility as per BPS



Under 9th BPS

58,342/ 26 x 15 x 40

= 13,46,353

Max. Rs. 10 lacs

28110 x 20 =

Rs. 5,62,000

10 lacs

Under 10th BPS

62,758 / 26 x 15 x 40

= 14,48,260

Max Rs. 10 lacs

47270 x 20 =

Rs. 9,45,400

10 lacs

b) A Daftary with 8 Stagnation Increments and retiring in July, 2015 after 40 years’ service

Eligibility as per the Act

Eligibility as per the BPS


Under 9th BPS

30,930/ 26 x 15 x 40

= 713,770

14890 x 20

= 2,97,800


Under 10th BPS

33,204 /26 x 15 x 40

= 766,250

25000 x 20

= 5,00,000


Difference of Rs. 52,480 will be paid

c) An Officer retiring in July, 2015 after 40 years’ service
( with Old Basic pay Rs. 25,700 and revised Basic pay Rs. 42,020)

Eligibility as per the Act
Eligibility as per BPS


54,150 / 26 x 15 x 40

= 12,49,615 Max. Rs. 10 lacs

25700 x 20 =

Rs 5,14,000

10 lacs


56,180 / 26 x 15 x 40

= 12,96,460Max Rs. 10 lacs

42020 x 20 =

Rs 8,40,400

10 lacs

d) An Officer retiring in July, 2015 after 40 years’ service

( with Old Basic pay Rs. 40400 and revised Basic pay Rs. 66070 )

Eligibility as per the Act
Eligibility as per BPS


85,123/ 26 x 15 x 40

= 19,64,377 Max. Rs. 10 lacs

40,400 x 20 =

Rs 8,08,000

10 lacs


88335 / 26 x 15 x 40

= 20,38,500 Max Rs. 10 lacs

85020 x 20 =

Rs 13,21,400


Difference of Rs. 3,21,400 will be paid

e) An Officer retiring in July, 2015 after 40 years’ service

( with Old Basic pay Rs. 52000 and revised Basic pay Rs. 85000 )

Eligibility as per the Act
Eligibility as per BPS


1095654/ 26 x 15 x 40
= 25,28,400 Max. Rs. 10 lacs

52,000 x 20 =

Rs 10,40,000

10.40 lacs


113645 / 26 x 15 x 40

= 26,22,577 Max Rs. 10 lacs

85020 x 20 =

Rs 17,00,400

17.00 lacs

Difference of Rs. 6.60 lacs will be paid

Our units should ensure that such arrears of Gratuity wherever eligible is paid to the concerned retirees.

With greetings,

Yours Faithfully,



The Reserve Bank of India made available an illustrative list of Early Warning Sign...als (EWS) which should alert bank officials about wrongdoings and frauds in loan accounts. In the background of increasing incidences of frauds in general and in loan portfolios in particular, the Reserve Bank of India brought into force the systemized framework for fraud risk management in banks. 

 The framework also provided the banks a list containing some 45 early warning signals which should immediately put the bank on alert regarding a weakness or wrong doing in a loan account which may ultimately turnout to be fraudulent. Individual banks may add other alerts/signals based on their experience, client profile and business models.

The one or more early warning signals so complied by a bank would form the basis for classifying an account as Red Flagged Accounts (RFA). In case the account is classified as a RFA, the Fraud Monitoring Group (FMG) will act upon for further investigations or remedial measures necessary to protect the bank’s interest within a stipulated time which cannot exceed six months.

The bank upon identifying the fraud should also report the matter immediately to investigative agencies for instituting criminal proceedings against the fraudulent borrowers, besides reporting the same to Reserve Bank as per the above framework

  The 45 Early Warning signals provided by the Reserve Bank are as under
Default in payment to the banks/ sundry debtors and other statutory bodies, etc., bouncing of the high value cheques

 -Raid by Income tax /sales tax/ central excise duty officials.-
-Frequent change in the scope of the project to be undertaken by the borrower.-
-Under insured or over insured inventory.-
-Invoices devoid of TAN and other details.-
-Dispute on title of the collateral securities.-
-Costing of the project which is in wide variance with standard cost of installation of the project.-
-Funds coming from other banks to liquidate the outstanding loan amount.-
-Foreign bills remaining outstanding for a long time and tendency for bills to remain overdue.-
-Onerous clause in issue of BG/LC/standby letters of credit.-
-In merchanting trade, import leg not revealed to the bank.-
-Request received from the borrower to postpone the inspection of the godown for flimsy reasons.-
-Delay observed in payment of outstanding dues.-
-Financing the unit far away from the branch.-
-Claims not acknowledged as debt high.-
-Frequent invocation of BGs and devolvement of LCs.-
-Funding of the interest by sanctioning additional facilities.-
-Same collateral charged to a number of lenders.-
-Concealment of certain vital documents like master agreement, insurance coverage.-
-Floating front / associate companies by investing borrowed money.-
-Reduction in the stake of promoter / director.-
-Resignation of the key personnel and frequent changes in the management.-
-Substantial increase in unbilled revenue year after year.-
-Large number of transactions with inter-connected companies and large outstanding from such companies.-
-Significant movements in inventory, disproportionately higher than the growth in turnover.-
-Significant movements in receivables, disproportionately higher than the growth in turnover and/or increase in ageing of the receivables.-
-Disproportionate increase in other current assets.-
-Significant increase in working capital borrowing as percentage of turnover.-
-Critical issues highlighted in the stock audit report.-
-Increase in Fixed Assets, without corresponding increase in turnover (when project is implemented).-
-Increase in borrowings, despite huge cash and cash equivalents in the borrower’s balance sheet.-
-Liabilities appearing in ROC search report, not reported by the borrower in its annual report.-
-Substantial related party transactions.-
-Material discrepancies in the annual report.-
-Significant inconsistencies within the annual report (between various sections).-
-Poor disclosure of materially adverse information and no qualification by the statutory auditors.-
-Frequent change in accounting period and/or accounting policies.-
-Frequent request for general purpose loans.-
-Movement of an account from one bank to another.-
-Frequent ad hoc sanctions.-
-Not routing of sales proceeds through bank.-
-LCs issued for local trade / related party transactions.-
-High value RTGS payment to unrelated parties.-
-Heavy cash withdrawal in loan accounts.-
-Non submission of original bills.-

Public sector banks should disclose details of bad debts, says Delhi High Court -25th June 2015
NEW DELHI: Public sector banks should disclose details of cases pertaining to persons and establishments whose bad debts of over Rs 100 crore have been written off, the Delhi High Court has held.

This disclosure involves an element of public interest and tax payers have a right to know the manner in which state- run banks sanctioned them, Justice Rajiv Shakdher said

"Prima facie, in my view, this information may have to be disclosed," he said.

The court's order came on a plea filed by the State Bank of India (SBI) against a January 20 order of the Central Information Commission (CIC) asking the bank to supply to RTI applicant Raju Vazhakkala information regarding total Non- Performing Assets (NPAs) written off between 2004 and 2013.

The bank contended that it has a fiduciary relationship with the account holders and the information should be exempted from disclosure under Section 8(1)(e) of the RTI Act.

It also submitted that Section 44 of the SBI Act 1955 also prohibits disclosure of customer's information to any third party.

The judge brushed aside the SBI's contention and observed that the reason "I have come to this prima facie conclusion is this: the petitioner (SBI) is undoubtedly a nationalised bank, which on its own is showing written off as NPAs, its loan accounts having outstanding of Rs 100 cr or more.

"The sheer extent of the write-off would, in my view, perhaps, inject an element of public interest in the matter, which is the exception provided for in Section 8(1)(e) of the RTI Act, 2005," the court added.

It also said this "matter needs further examination" and issued notice to Vazhakkala, a Kochi resident.

The court also asked the RTI applicant to file counter affidavit within four weeks.

"Rejoinder, if any, be filed before the next date of hearing. List on September

Read more at:

Finance Ministry Assessing Capital Requirement of PSU Banks: Report-NDTV

The Finance Ministry has asked public sector banks to submit their immediate and mid-term capital requirement from the government to comply with global capital adequacy norms and also to fund their growth plans.

"Besides current fiscal need, banks have been asked to submit five-year capital requirement," sources said.

The government has started assessment of capital requirement of public sector banks. It has already received presentations of six public sector banks-- UCO Bank, United Bank of India, Allahabad Bank, Punjab National Bank, Punjab & Sindh Bank and Oriental Bank of Commerce.

Presentations by State Bank of India, Union Bank of India, IDBI Bank and Central Bank of India were made today while Bank of India, Bank of Baroda, Dena Bank and Bank of Maharashtra would make their presentations tomorrow in Mumbai.

South-based Andhra Bank, Indian Overseas Bank, Corporation Bank, Canara Bank, Syndicate Bank and Vijaya Bank would make presentation on July 3 in Bengaluru.

The presentation includes overall fund raising roadmap, including from internal accrual, selling of their non-core assets, divestment of government stake and fund support from the Centre.

Last year, Finance Minister Arun Jaitley had said that to be in line with Basel-III norms, there is a requirement to infuse Rs 2.40 lakh crore as equity by 2018 in public sector banks.

Keeping the huge capital requirement in the mind, the Union Cabinet in December 2014, allowed public sector banks to raise up to Rs 1.60 lakh crore from markets by diluting government holding to 52 per cent in phases so as to meet Basel III capital adequacy norms.

The Cabinet asked the PSBs to broad base retail shareholding while going in for the fund raising.

Out of 27 PSBs, Government of India controls 22 through majority holding. In the remaining 5 banks, state-run SBI holds majority stake.

Last fiscal, the government infused Rs 6,990 crore in nine public sector banks, including SBI, Bank of Baroda, Punjab National Bank for enhancing their capital and meeting Basel III norms.

The total government support provided to PSU banks towards capitalisation during the past four years was Rs 58,634 crore.

Tax payers need to know how PSBs write-off bad loans: HC-Indian Express

Disclosure involved an element of public interest; tax payers have right to know.

Why should public sector banks (PSBs) not disclose details of cases where they have written off thousands of crore of rupees as bad debts?
After all, these banks do not only function on deposits from people but their equity capital is also structured on the tax payers’ money.
Observing this, the Delhi High Court has prima facie held as bad the PSBs resistance in divulging information about the entities which availed the benefits of their loans being written off as bad debts or unrecoverable amount.
Justice Rajiv Shakdher, during a recent hearing, observed that this disclosure involved an element of public interest and tax payers have a right to know the manner in which PSBs sanctioned them.
The judge noted there were several cases wherein the banks wrote off debts to the tune of Rs 100 crore or more while the government kept infusing tax payers’ money in the form of equity capital. -
See more at: http://indianexpress.com/article/business/business-others/tax-payers-need-to-know-how-psbs-write-off-bad-loans-hc-2/#sthash.XV9tQpKG.dpuf