REJOINDER TO FM’s STATEMENT ON BANKS’ PROFITS!!

ALL INDIA BANK OFFICERS’ CONFEDERATION 

 Phone:011-23730096 Tel/Fax 23719431  
 E-Mail: aiboc.sectt@gmail.com 
  
Circular No. 2014/19 Dated: 13/02/2014 

Dear Comrades, 

“ALL PROFITS CAN’T BE USED TO PAY HIGHER WAGES” :AGREED 
BUT ARE THESE MEANT TO PROFIT THE PRIVATES ? 

While we share the anger and anguish of our membership over the statement of Hon’ble Finance 
Minister, Sh. P. Chidambram on the occasion of 78th
 foundation day of Indian Overseas Bank on 
10thFebruary,2014, we also thank him for once again (he is already on record in Parliament that 
profitability of the banking industry is increasing) accepting the fact that BANKS ARE EARNING 
PROFITS.

 We also agree with him that Banks’ profits are not for enhancing the wages, but, we 
also wish to remind the following:

1. The Prime objectives of the Nationalisation were to bring parity in the society which was 
branded as a major bold and historical decision of the century by late Smt. Indira Gandhi, 
the celebrity Prime Minister of the country. 

2. Nation had acknowledged that it was historical as it believed that prime focus after 
Nationalisation would be poverty alleviation by upbringing the rural poor through various 
welfare schemes introduced and implemented through nationalised banks. 

3. The workforce of the Nationalised banks also responded fittingly by spreading its presence 
from 8000 to more than 80000 branches since Nationalisation, in every nook and corner of 
the country, dedicated and devoted their lives in executing government’s initiatives and 
policies, unmindful of personal comforts, participated whole heartedly in the nation building 
by way of uplifting the downtrodden above poverty line. 


4. Through this unparallel dedication by the employees of PSBs the presence of branches 
today has crossed 100000+ from mere 8262 branches as on the date of Nationalisation 
during 1969. 

5. Against their own policy, the government has attempted to encourage private sector to 
enter in to banking business. The resultant is that many private banks which commenced 
their business with fanfare became failure, a few transformed in to foreign banks and one 
was taken over by nationalised bank at the cost of nationalised bank’s business and profit. 

But still the nationalised banks were commanding 70% market share and 
making huge profits. 

6. Years back, world witnessed the failure of banking institutions all over and west was worst 
hit which brought the top banks to dust. Economic recession was the word substituted for 
the mismanagement. But Indian banking sector was shining as usual and Indian banks 
were making huge profits even in that adverse scenario. 
 Is it not the testimony for the managerial ability of workforce of Indian banking 
system? 7. Keeping the eyes on the vote bank, debt relief schemes were introduced which has marred 
the recovery mechanism in the banking industry and it became a major contributor in NPA 
building in the rural branches.  
Still banking sector made profits. 
8. Government forced the banks to restructure the advances due to natural calamities, banks 
did so to revitalise the rural economy. 
 Still banks generated profits. 
9. When the Govt. wanted the inclusive growth by introducing financial inclusion and ordered 
to ensure the presence even in remote, The Banks responded instantly to bring unbanked 
corners under banking services at huge expenses. 
 Still banks earned profits. 
10. When the govt. wanted to introduce DBT, we have readily agreed and accepted to carry 
out the un-remunerative business unminding the profit in the interest of countrymen. 
 Still banks have shown profit in the business. 
11. So many self employment training institutes are run by the banks for skill development in 
Indian youth at huge cost from out of the income earned. 
 Still banks are making profits. 
12. Recently Election education to the public is also entrusted to the banks in 543 districts. 
Banks will be undertaking this responsibility also with their resources and manpower. 
 Still banks are running their business with profits. 
13. In order to help the private corporate, CDR was forced on PSU Banks which is a drain on 
hard earned income of Banks. The income is further drained out in the form of Income tax 
and forced dividends from profits. 

Still sufficient Profits are available. 
The causative factors for pulling down the profits (beyond the reach of employees) 
are: 
a. Policies of the government. 
b. Impact of economic slowdown which is also resultant of government policies. 
 c. Write off of bad debts. 
 d. Concessions to be extended in permitting CDR to corporate. 
In the midst of all the above adverse situations forced by the controllers’ compulsions 
where the workers are not having any role, the Indian banks are making profits. 
A view on the following will depict a perfect picture on the power of public sector 
banks’ work force. 

 PSU BANKS PROFITABILITY (IN CRORES) 
                               2011      2012       2013 
GROSS PROFIT 99,981 116,335 121,943 
PROVISIONS     55,080   66,821   71,360 
NET PROFIT       44,901  49,514    50,583 

Notwithstanding the fact that PSU BANKS are consistently earning huge and 
increasing profits, we, the most responsible trade unions, are not linking our wage 
demand to the profit and we are DEMANDING WAGES AS OUR RIGHT. It was well defined and designed policy decided between bank employees and IBA to revise the 
wages every five years to provide a decent living for the bank employees who are playing a 
pivotal role in nation building. More so, for the officers the wage increase shall be linked to risk 
and responsibilities they shoulder. 
It is only the IBA which is linking the profitability with wage revision. Though we are primarily 
differing from the IBA’s views of linking the profitability with wage revision, the following 
arguments naturally arise even if it is taken for a debate 

1. If the profitability is the basis for the wage increase how the govt. employees are given 
manifold increase from out of the deficit budget? 
2. Why the value of the current shareholding is not reckoned by the govt. which nationalised 
the banks at par value, which was built up to the current level by the hard work rendered 
by the bank employees? 
3. When the govt. talks about capital infusion to increase their hold, why the dividend 
received over a period of four decades is not taken into account? 
4. If the govt. wants to take big chip in the name of Income tax also besides the huge 
dividend, how people would believe the crocodile tears of building up capital from the 
internal resources? 
5. If the govt. really wishes to build the capital out of internal resources how the govt. will 
justify their action of siphoning huge money from the banks in the name of interim 
dividend in September 2013 itself without even allowing the banks to retain such money 
and employ it to maximise the profit till march 2014? 
6. The PSB Banks would witness huge exodus due to superannuation within a period of five 
years from today to the tune of about 80% which needs about 10 lac employees to be 
recruited over a period of five years to replace the retirees and to face the future growth. 
-Is it not the responsibility of the Government, the majority stake holder, to initiate steps to 
recruit quality youth and introduce policies to retain youth in the Industry, so as to ensure 
the existence of PSBs from the potential threat of becoming extinct? 
-Should the threat of poaching the existing staff of PSB banks by New generation Private 
Sector Banks and foreign banks, not be a concern of Managements/IBA and Govt.

DO WE NOT DESERVE A SMALL SHARE OF PROFITS TO MEET OUR LEGITIMATE 
DEMAND OF REASONABLE COMPENSATION 

PSU Banks in India posted a profit of whooping 121917 crores during the year 2012-13 and if 
15% of the profits is provided, a reasonable wage hike can be given to the bank staff for next five 
years. After setting apart this negligible percentage from out of the profit earned to the hard 
working bank employees, the balance can be diverted towards providing bad debts and other 
purposes prescribed by the Hon’ble Finance Minister.
. 
It is indeed unfortunate and provocative that the finance minister suggests providing towards bad 
debts at the cost of employees legitimate salary revision, instead of initiating recovery measures 
by introducing stringent recovery measures. 
When the responsible reply does not come forth, should we not conclude that the Government 
policy is profiting the private by allowing the banks to decay through demoralising the staff? 

WE REQUEST OUR MEMBERS TO WIDELY CIRCULATE THIS COMMUNICATION TO OUR CUSTOMERS AND MEMBERS OF THE SOCIETY TO CREATE AWARENESS AND PUT THE FACTS STRAIGHT. 

 With Revolutionary greetings, Yours comradely, 

 (HARVINDER SINGH) 
 GENERAL SECRETARY