Sunday, September 12, 2010


Short version of post received from 
Member Akhil Bhartiya Bank Karmi Jagrook Sangharsh Sangh
Ramesh Kumar- e-mail

We bring it to your kind notice that the top management of the Public Sector bank ‘s are indulging in fraud in the Bank employees Pension Fund Trust account and violating the Pension Fund Trust rule ( formulated in consultation with RBI) approved by respective Boards, to inflate the profits and to gain incentive bonus of Rs 7.50 to Rs 8 lacs paid to PSB CMDs & EDs on achieving SOI targets set by MOF.

The employees and officers were offered pension in lieu o Provident Fund in 1993-95

Accordingly In-House Pension Fund Trust were established by each bank to pay pension to the employees as per scheme.

The Pension Fund Trust has to open a bank account. 

The Corpus of the Trust was created by transferring accumulated PF balance (Management Contribution together with interest) of Pension Optee Employees. In this account management has to contribute 10% of Basic pay of each employee every month (Statutory Obligation),and  Return on investments. Bank has to undertake actuarial valuation at the end of each financial year and short fall, if any, was to be paid in the Trust Account out of current year profit. 

w.e.f. from 01.11.1997 the IBA (as per mandate given by each bank) has entered into the wage settlement with Unions and accordingly following contributions should be paid in the pension fund trust.

• As per statute 10% of basic pay should be deposited in the pension fund trust account each month.
• IBA/ Bank’s entered into a Bipartite Settlement with Unions and have agreed that the incremental cost of pension will be recovered from employees and will be transferred it to pension fund trust since 01.11.1997.
• As per Bipartite Settlement from 01.11.1997 to 31.10.2002 (7th BPS), incremental cost of pension was agreed 16.50% to be shared by Management share 8.25% + employees share 8.25% 
• As per 8th BPS 01.11.2002 to 31.10.2007 the incremental cost was advised as 18.50% which was to be shared 8.25% by employees and 10.25% by management.
• As per 9th BPS 01.11.2007 to 31.10.2012 the incremental cost was advised as 26% which was to be shared 13% by employees and 13% by management.

• IBA/Bank reduced the wages of employees and officers to the extent of incremental cost and agreed that incremental cost of pension will be transferred to pension fund trust. 
• IBA never advised the accounting procedure to be adopted by the banks for depositing incremental cost of pension to pension fund trust.
• Further Banks made a breach of trust because it agreed to transfer incremental cost of pension to pension fund trust of all employees as per settlement but never transferred such wages to pension fund trust to inflate the profits & to please the bosses sitting in Ministry of Finance.
• In this way Banks falsified the Balance Sheet which was audited by SCAs as fair and transparent statement of accounts as on date.
• The SCAs also certified the compliance of AS-15 which was infact not complied with.
• The amount involved in the scam in the banking industry is more than Rs 40000 cr which started since 01.11.1997.

The Bank of Rajasthan already committed fraud in employees pension fund: Read complete report in ET dated 26.02.2010 . In bank of Rajasthan there is under provisioning of Rs 52 crores in pension fund of 4000 employees. Further 149 cr under provisioning in other retirement fund. This has been done to show profits by the bank. You must see the qualified statement of Chartered Accountant in the published financial results of Bank of Rajasthan March 2010.

Bank of Baroda a top nationalized bank has dipped into the pension fund and transferred substantial amount of boost their profit as on 31.03.2010 .
See following proofs:

1. The Soft copy of annual report 2008, 2009 & 2010 is enclosed.
2. You may observe bank of Baroda has deposited Rs 472 crore during 2008-09 and 365 crore during 2007-08 but during 2009-10 employer contribution to pension fund is NIL. How the employer contribution can be Nil during 2009-10 when bank is legally bound to deposit 10% of basic pay in the pension fund trust account each month. In fact the contribution should be very high because wage hike effected from 01.11.2007 resulted in rise in basic pay of all employees/officers.
3. Please note that IDBI has deposited Rs 220 cr, IOB 366 cr, Union bank 201 crores during 2009-10 against NIL contribution by BOB.

4. The balance sheet is falsified to this extent.
Further analysis of bank of baroda balance sheet reveals and proof this fact:
• The employees expenses as per schedule 16 shows rise from Rs 1903.40 crores to 2348.13 crores during 2008-09 but the rise is meager from Rs 2348.13 crores to 2350.88 crores during 2009-10 inspite of the fact that wage revision has been effected during the period from 01.11.2007? Why this happened because bank has not deposited 10% of basic pay in the pension fund trust of employees to inflate the profits.

Fraud by all Public Sector Banks like Canara Bank, Union Bank, Bank of Maharashtra, Corporation Bank etc during April June 2010 quarter (except Andhra Bank PNB & BOI See June 2010 quarterly result of all Banks).

The Bank’s have entered into agreement to provide another option of pension to retired and existing employees. 

According to actuarial valuation the cost of pension for new employees opting pension is rs 6000 crores and it is to be shared in the ratio of 70% (4200 cr) by bank and 30% (1800 cr) by employees. 

The banks have recovered Rs 1800 cores from employees from there wage arrears in June 2010 but have not contributed Rs 4200 cr (there share in the pension fund).

The accounting note in the June quarter of above banks confirms that the liabilities on account of new pension optees will by provided on crystallization.

RBI should note that when the 30% recovered from employees stand crystallized why Bank’s liability of 70% has not been crystallized. They have inflated the profits to this extend.

What RBI must ensure that Bank must deposit following amount in the Pension Fund Trust Account from the date of 7th BPS i.e. 01.11.1997.

• Statutory 10% of contribution of Basic Pay Plus
• Incremental cost of pension (Bank share 8.25% from 01.11.1997 Then 9.25% from 01.11.2002 and then 13% from 01.11.2007) Plus
• Incremental cost of pension (Employees share 8.25% from 01.11.1997 Then 9.25% from 01.11.2002 Plus
• Transitional liability since 2007 as per AS- 15 plus
• Deficit if any as per actuarial valuations must be deposited in the pension fund trust account. 
• the corpus of the pension fund has been given by the Employees by transferring there PF and they have agreed to forego there wage as per above settlements to the extent of incremental cost. Therefore it is employees fund and not the management reserve fund where they may dip to inflate the profit and distribute it as dividend.

Further RBI Inspecting officer must ensure in AFIR 2010 (ensure during 27.04.2010 to 26.07.2010)

• Auditor to ensure that banks deposit in the Pension trust statutory 10% Statutory 10% contribution on revised basic pay every month. Plus
• Incremental cost of pension (Bank share 13% from 01.11.2007) every month. Plus
• Incremental cost of pension (Employees share 13% from 01.11.2007) every month. Plus
• Amount recovered from the employees @2.8 times of Nov 2007 revised basic. Plus
• Entire Banks share of PF of those employees (serving as well as retired) now opting for pension Plus
• The auditors should ensure that Bank contribute 70% of 6000 crores (4200cr) plus 70% of 3116 crores 2182.55 cr during April June 2010 as per IXth BPS because they are recovering 30% share from employees,so they must contribute their share.

1 comment:

Anonymous said...

Sir, Through this site I want to bring forward to your notice of some EXSM bretherns plight. The EX Servicemen joined in banks in clerical cadre can have Pay Protection as per Govt rule. The correct and latest order regarding pay protection of EXSM from DOPT is clarified in “No. 3/19/2009-Estt. (Pay II) Dated 5th Apr 2010” OM pertaining Re-employed EXSM, which can be easily found in DOPT site or can be googled. As long as EXSM employed in Banks are concerned, DA on pension has to be surrendered , if they are opting for pay protection. This can be further clarified in PCDA site, “”. Many Banks though allowing pay protection to EXSM employees, but deduction of DA on pension is not ensured. Despite clear instructions form PCDA, RBI, some EXSM employees hide or supress the facts from their PDAs. This leads to confusion among other EXSM employees whether to forgo DA on pension or put false life certificates. Some question the module of recovering excess amounts already received by them as DA on pension and refrain others that nothing will happen and proclaim PCDA or Banks can not recover the already paid amounts . Already letters to Dept of Economic Affairs and Dept of Financial Services have been written. All banks are requested to provide data on the number of EXSM employed with them and whether their DA on pension has been surrendered to concerned Dept , if they have been pay protected , has been asked through RTI. With a conservative estimate the loss to exchequer may well exceed Rs 50-130 crores.