Role of Nationalized Banks in India
Public or nationalized banks in India have always played a crucial role in the financial inclusion and the development of social sectors in the country. They are the backbone of the government’s socio-economic plan and have made a transformative impact on the development of the country’s landscape. Although the contributions are substantial, the bank employees’ efforts are not always taken under consideration, and the government has taken steps only to worsen the conditions of the service.
Salary and Pension Provisions in Indian Banks
Salaries in nationalized banks are less attractive than those of the private Bank; the only compensation a bank provides its employees in the public sector is their pension provision. The bureaucracy has caused bank pensioners in privatized banks to worry about their conditions and requirements after retirement.
The employees have always delivered their services on official policies and programs, and the only compensation they received for the absence of a competitive salary is their terms of service. However, the employees should have placed the case where their overall payment should be concurring with the volume and nature of the work and risks involved in the operational roles.
Although it should have been the way, the pension is not part of their contractual agreement. This is where the parallel between the nationalized banks and private banks ended. According to the 10th settlement with the staff unions of banks, the Indian Bank Association clarified in exact words, “as banks do not have any contractual liability towards the bank pensioners, the demand for revision of pension along with salary revision cannot be accepted.”
Pensions for all government employees are a typical phenomenon. It is not the case in the case of bank employees in the public sector. The pension of these employees did not undergo revision with their periodic revision of salaries as done for all government employees. For all government employees, the salary and pension undergo revision with the systematic effect of the Pay Commission. Although the lowest-paid government employees get a revised retirement pension scheme with every Pay Commission, the case of bank employees is entirely different.
According to bank staff unions of retirees, the bank sector had not revised the pension plans for almost 20 years, even when the inflation went up ten times. The family pension in most banks is only 15%, while the RBI and Government allow a 30% pension scheme for their retired employees. In some cases, the retiree receives a pension below Rs. 200 per month, which is even insufficient to provide food for a day in a family. Privatization of public sector banks can worsen the situation or improve it depending on the conditions implemented for employees.
With these problems underway, it is a recognized fact that the government’s socio-economic programs need to make substantial use of the banking platform to deliver and monitor better pension schemes for their employees. While nationalized banks are responsible for the revolution of rural areas with various branch expansions and village adoptions,they need to take care of their employees by revising their service schemes and conditions.
Nationalized Banks and their Denial of Retirement Pension for Employees
Despite all the disadvantages for the employees, nationalized banks continue to be the primary go-to stop for India’s economic agendas for delivering a development program. They are the one-stop delivery platform for all financial requirements in the rural population of the country. While financial inclusion is an essential aspect of reducing poverty and improving the under-privileged lives, it is more important for us to address the working conditions of the bank employees and improve them.
One of the reasons mentioned for the denial of retirement pension for employees is the pile of loans that add to the bank debts. It is crucial to understand that loans and bank debts are an essential part of making employees. Moreover, it is also a testament to how powerful and politically influenced tycoons keep ignoring and violating several financial norms and bank regulations to secure credit and default on them. When a loan, if not returned, adds to an existing amount of debts for the Bank. With loan debts piling up on Bank, the credit line is affected along with the credit culture affecting the pension of the bank pensioners.
Politicians have also severely contributed to the undermining of the integrity of banks. They have decked up their requirements and have used banks repeatedly for the replenishment of their election credentials. The big loan defaulters always have the money to hire the best legal bits of help in the country and game through the judiciary system. India has several laws in place that do not contribute to the problems and have sadly proven as an inefficient structure against loan defaulters.
Injustice to Lower Class
The talk is currently all about the privatization of national banks like the Punjab & Sind Bank, Indian Overseas Bank, and Bank of Maharashtra. When we hear about this, the first thing that comes to mind is the lower class of the nation being affected by this move. At the same time, the government had run a massive promotional campaign for the poor to have the facility to open bank accounts. Although the scheme did not focus on any particular sector, it is evident for the government that a low class will always choose a nationalized banks over a private bank due to its securities. With a privatized bank sector for some of the nationalized banks, it serves as an injustice to the lower class.
Most banks are already making pension reserves by setting aside a part of their profits for pension reserves. It allows banks to pay pensions to their employees without any change in their regular expenditures on the part of the Bank or the government. This reserve created by banks represents money, property, and deferred wages of employees, and the banks hold it in trusts. For banks like the State bank of India, the trustees of its Pension Fund over the years have built an adequate amount to satisfy all future pension obligations. The trustee is considered sufficient enough to provide pension to all bank employees for a very long time.