CIRCULAR NO: 156 7 th December,

2009

TO ALL AFFILIATES/MEMBERS:

INDUSTRY LEVEL NEGOTIATIONS

ROLE OF THE INDIAN BANKS’ ASSOCIATION

The Indian Banks’ Association is a voluntary organization of the

Managements of the various banks in the country. The membership
consists of the banks in the Private, Public, Co-operative and also Foreign
Banks who will be collectively represented by the Indian Banks’
Association in all the forums. As this has become very handy in dealing
with the industry level issues, the Government has entrusted them with
certain onerous responsibilities in the larger interest of the Banking
Industry. The IBA also plays a complimentary role as far as the Reserve
Bank of India is concerned in taking up the issues of the Managements of
all the Banks collectively and also facilitating the dissemination of
information, guidelines, policies and programmes of the RBI from time to
time. Thanks to the globalisation impact, the IBA has acquired a totally
professional approach in dealing with all the matters concerning the
Banking Industry in the recent past. The Headquarters which was
functioning from the Stadium House, Church Gate, Mumbai was shifted
to the World Trade Center to give it a global look and also an aura of
highly professional outlook.

2. One of the important tasks entrusted to the Indian Banks’

Association was to negotiate with the major unions for reviewing the
salary scales from time to time. The IBA has been responsible for
discharging this responsibility from the middle of 1960s’ in the case of
the workmen staff in the Banking Industry and as far as the Officers’
fraternity is concerned from the middle of 1980’s after introduction of
the Pillai Committee Recommendations as the Government wanted that
the IBA’s maturity and experience will come handy in dealing with the
issues connected with the salary revision of Bank Officers’ as well.
3. The Managements of the Banks who are members of the Indian
Banks’ Association have handed over a mandate; so that the
representatives of the Indian Banks’ Association will be in a position to
talk to the unions on behalf of the Managements of the member banks.
The mandate is given by each bank with lot of trust on the leadership of
the Indian Banks’ Association; so that they are able to resolve the issues
in a peaceful manner to ensure lasting industrial relationship in all the
banks, once a settlement is reached amongst the unions and the Indian
Banks’ Association. The disputes arising if any, in between are sorted
out through dialogue by the representatives of the Unions and the Indian
Banks’ Association. On behalf of the Officers’ fraternity, the unions
representing them in the Banking Industry are as follows:-

AIBOC - 1,94,764.00
AIBOA - 24,677.00
INBOC - 12,971.00
NOBO - 2,854.00
------------------
TOTAL - 2,35,266.00
------------------
There are 5 Workmen Unions representing the Banking Industry in the
country. Names of these unions and the membership enjoyed by them
are as follows:-
AIBEA- 2,25,463.00
NCBE - 1,68,732.00
BEFI - 33,136.00
INBEF- 9,636.00
NOBW - 11,835.00
-------------------
TOTAL 4,48,802.00
-------------------
4. The Employees and Officers working in State Bank of India are
having independent unions for the Award Staff and the Officers of the
Bank. There are no rival unions in State Bank of India. The Officers’
Federation consists of 84,000 members which includes the members of
the Associate Banks (64000 + 20000) and similarly the Workmen Staff
are members of the Staff Federation which has over 1,41,000 members.
These organisations are affiliated to the All India Bank Officers’
Confederation and National Confederation of Bank Employees
respectively. Together both these organizations have a total
membership of 2,25,000/- which is more than 30% of the total strength
of the Banking Industry.

5. The current salary revision was full of disputes, struggles and

agitations in the Banking Industry. The major issues flagged during the
agitation were a fair wage revision, the 2nd option on Pension to the
employees of banks other than State Bank of India, who are governed by
a separate superannuation scheme which is in vogue for the last 200
years in the country. The number of strikes which took place in the
Banking Industry in hammering out a settlement over the 2nd option on
Pension issue, is much more than the number of strikes which were
conducted on any other issue. On all these occasions, the performance
of the Employees and Officers of State Bank of India as an affiliate of
their parent organizations and leading from the front was highly inspiring
to others and total. It is mere blackout; when it comes to the strikes in
the State Bank group as a whole under the banner of both Federations.
Officers, upto SMGS-V have joined the strikes. It was a show of strength
and unity in the industry.

6. The unity and solidarity that was exhibited collectively by all the
unions enabled the Government to consider the long pending demand of
the 2nd option on Pension. In course of negotiations, understandings
were reached for sharing the additional cost of 2nd option on Pension by
the employees as well. The sharing of the cost of 2nd Option on Pension
by the entire workforce in the banks other than State Bank of India and
also the incremental cost by all of them again at the time of allocation of
the wage load to various heads was a matter of serious negotiations
between the UFBU and the IBA. We were always endeavoring to protect
the interest of the workforce and insisted that the Management should
bear the major portion of the cost as per the convention.

7. The additional cost on account of the Pension Scheme that was

borne at the industry level was separately compensated to the
employees and officers in State Bank of India during the earlier
occasions through negotiations between the Unions and the
Management which was known to the IBA and they also had supported
such agreements in State Bank of India. During the current negotiations,
the IBA wanted to raise the issue of the New Pension Scheme for future
recruits in State Bank of India as well. The issue came up as a surprise
to the unions in particular the leadership of both the Federations in State
Bank of India and when they indicated that there is no question of the
issue coming up for discussion in isolation and the entire gamut of the
Superannuation Scheme that is prevailing in State Bank of India and the
outstanding issues that are still under consideration by the Government
will have to be brought to the negotiating table and then only the issue
of NPS in SBI can be taken up for discussion. The Chairman of Indian
Banks’ Association dropped the discussions on this issue and took a plea
that there is no need to continue discussions on the issues of
superannuation connected with the State Bank of India at the IBA level
and hence it was not persisted by them.

8. In the mean time, we requested the UFBU convenor and Chairman

of IBA and SBI to insert a protective clause in the MoU at IBA level as
regards superannuation and incremental cost of pension to be settle at
Bank level as was done during thee previous bipartites. Our Chairman
also took up the issue with the IBA and we were informed that interest of
SBI employees will be protected, at the time of drawing the MoU. The
Convenor of UFBU also assured us that the matter will be resolved
amicably. Presidents of AIBOC and NCBE pursued the matter with the
IBA and UFBU along with our leadership.

9. Accordingly, at the time of the recording of the Minutes on the

salient features and signing of an MOU by the unions – on 27.11.09, the
leadership of both the Federations raised certain issues and the need for
incorporation of the same in the Minutes. The request of both the
Federations was that there is a need to incorporate the arrangement as
regards the settlement of the extra cost that the industry as well as the
workforce is incurring on account of the 2nd option on Pension and as
also the incremental cost on account of salary revision with the
employees and officers of State Bank of India since this was the tradition
earlier. The representatives also wanted that the issue has to figure in
the MOU and the IBA should make these provisions to avoid conflicts at a
later date.
10. The Federations insisted for such a provision in the MOU for the
following reasons:-

a) For the first time the IBA wanted to bring the bank level issue of
the Superannuation Scheme prevailing in State Bank of India as a
part of the MOU and insist the State Bank of India management to
fall in line with other banks – which raised suspicion in the minds of
both the Federations that a conspiracy is being hatched by the IBA
to create industrial relations problem in State Bank of India.
b) The issue of 2nd option was settled as quid-pro-quo at the industry
level – wherein the employees will bear a portion of the cost and
also will be agreeing for the introduction of New Pension Scheme
which was being opposed by the UFBU earlier since the Pension
Scheme that was introduced in the Banking Industry for the benefit
of all other banks was not an additional benefit, it is in lieu of the
Provident Fund and an option was given at the time of the
introduction. Hence, it was iniquitous to insist that the existing
Pension Scheme should be replaced by the New Pension Scheme –
which is going to be handed over to the Private operators.
c) The Federations in State Bank of India were able to get the benefit
of the additional cost that the industry incurred at the time of the
introduction of the Pension Scheme and also in the subsequent
settlements by way of additional benefits as also improvements in
the superannuation scheme. The employees and Officers went on
joint indefinite strike during April 2006 when the Government and
State Bank Management failed to consider the improvements in
the superannuation scheme in the 8th bipartite and got the Pension
Ceiling and Family Pension ceiling revised since it was not revised
for the last 14 years and 20 years respectively.
d) The Steering Committee of the representatives of both the
Federations who were holding periodical consultations amongst
themselves based on the developments from time to time were of
the unanimous view that these issues will have to be discussed
and necessary provisions should be made in the MOU in order to
avoid the Government as well as IBA backing out subsequently on
implementation of the 9th bipartite agreement. It was also felt by
 the Steering Committee; in view of the fact that both the
Federations represent more than 30% of the workforce and 100%
of the members in State Bank of India should not be a party to the
MOU in case these provisions are not incorporated in order to
protect the interest of the employees and officers in State Bank of
India.

11. The leadership of both the Federations also had serious

reservations on sharing the incremental cost as indicated by the IBA for
the first time during the negotiations. The views of both the Federations
were as follows:-

a) The leadership of the State Bank Federations were opposing the

imposing of the incremental cost on the employees from the
beginning. Keeping in view of the position of Banks during 7 th and
8th bipartite a portion of incremental cost on pension was shared
by the employees out of Salary package. These were matters of
negotiation on the earlier occasions. When the workforce is
already subjected to a huge burden on account of the sharing of
cost of 2nd option on Pension; sharing of the incremental cost by
the entire workforce in addition at the rate of 23% (10+13) was
yet a very crucial blow and would cost around 6% of the wage load
thus reducing the wage hike of 17.5% to 11.5%, although it was a
better percentage when compared to the last revision. We were
insisting for a dialogue on this issue and requested the leadership
of the United Forum of Bank Unions that the tradition as regards
the sharing of the incremental cost was through a negotiated
settlement. The incremental cost at 36% of pay indicated by the
IBA is higher, which require verification by our common actuaries.
The employees shared during the last occasion to the extent of
19.25% (10+9.25) - it was just one percent over and above the
earlier wage settlement (7th Bipartite) that is 18.25% (10+8.25).
There was not only scope for negotiation but strong justification for
reducing the burden on the workforce through convincing
arguments before the IBA.

b) The incremental cost was declared to be 36% without any prior

discussions at the time of signing of MOU and which came as a
 rude shock to many of the representatives of the unions. There
was no study nor the working to show the need for such a huge
provision when there is going to be 100% membership under the
Pension in future. The leadership of both the Federations during
UFBU meeting held on the evening of 26th November, 2009 wanted
a discussion on the subject and were asking for the postponement
of the settlement by just a couple of days to enable us to study the
impact of these new proposals brought by the IBA. Even the BEFI
leadership was also pleading for 3-4 days time to consult the
actuary.

c) In case there is stalemate on the issue of sharing of the burden of

incremental cost – the issue could be debated with the IBA
representatives separately and an amicable solution could be
found in case we do not rush through the MOU.

12. The points were raised in the UFBU and the Convener brushed
aside these views and took a stand that there is no question of further
debate and the MOU has to be finalized on 27th November, 2009 only.
The leadership of both Federations pleaded as follows:-

a) that the issue of State Bank of India has to be resolved before

concluding the MOU to avoid further complications;
b) the issue of sharing of the incremental cost to the extent of 23% of
pay amounts to increase to the extent of 3.75% which will reduce
the salary revision percentage considerably.
c) The signing of MOU could be delayed by another two or three days
since the advice of the Chairman of State Bank of India and also
some of the other senior executives of other banks can be
obtained and through their intervention an amicable solution could
be reached. At the time of 8th Bipartite when such a stalemate was
created – the meeting was adjourned for a short time and the then
General Secretary of the Federation who was also the Convener of
the UFBU sought an appointment with the Chairman of SBI who
had taken over as the Chairman of IBA and convinced him the
need for taking a pragmatic view as regards the incremental cost.
Ultimately the IBA had to accommodate the sentiments of the
unions and the burden was reduced considerably. Thereafter, the
 meeting resumed and conclusions were reached. The Chairman of
IBA had all the time and power to introspect on these aspects and
reduce the burden on the employees which he failed to discharge
thereby causing a serious damage to the workforce in the Banking
Industry.

13. When these pleadings failed to evoke any positive response from
our own leadership in the UFBU and also the Chairman of IBA, the
representatives of both the Federations served a letter on the Chairman
of IBA in their capacity as the General Secretaries of the All India Bank
Officers’ Confederation and also National Confederation of Bank
Employees so that he can understand the intensity of the frustration of a
large chunk of the workforce and take a pragmatic view for sorting out
the issue. We understand that the Chairman of SBI also requested the
Chairman of IBA to defer the MoU for couple of days, to resolve the
issue.

14. As incremental cost of pension at 23% of pay, reduced from the

wage hike of 17.5%, will be utilised for transferring it to the Pension
Fund of the other Banks, in case of SBI employees, incremental cost thus
reduced from the wage increase cannot be credited to the Pension Fund
of other banks. Therefore, we insisted for a protective clause in MoU at
IBA level or at SBI level, simultaneously before finalising the MoU. The
request was just overlooked and they went ahead with signing of the
MoU.

15. It is most unfortunate that the Chairman of the Indian Banks’

Association himself became a party for such a controversy and is
reported to have gone to the extent of mentioning to the press as
appeared in the Business Line – “We have done our job after
signing the wage hike agreement with UFBU and if there is
any resentment among the unions of the SBI, which are
also part of UFBU, for wage negotiation talks, then they
should settle it with their respective management. Infact,
representatives of all the nine bank employees unions had
signed the MoU and hence the deal is now being
considered as a final one. We, at IBA, can’t discuss the
issue which is between the bank employees and the
management of a particular bank, added Nair. However,
he also said, they (NCBE and AIBOC) wanted to insert a new
clause in the MoU at the eleventh hour which was not
possible for us. On the preparedness of the banks to go for
the wage hike, Nair said that all the banks have been
keeping aside a substantial fund for quite sometime for
this purpose and hence it will not be difficult to pay the
arrears, which would be accrued since November 1st,
2007”. The leadership of both the Federations are not interested in
going into the technicalities of these observations and also the question
of the application of the agreement on the Employees and Officers in
State Bank of India. We are capable of sorting out the issues through
our own organizational strength. But certain fundamental questions
need to be addressed by IBA. The major ones are:-

a. Does the 30% of the workforce and their sentiments do not

count for the IBA while dealing with such a sensitive issue;
b. What prevented the IBA Chairman to grant an adjournment
and decide the entire issues raised by the unions of State Bank of
India and seek the views of the Management of State Bank of
India;
c. We are also given to understand that the Government too
wanted an amicable settlement with the industry as a whole
including State Bank of India;

d. What compelled the Chairman of IBA who had also witnessed

a similar situation during the last 2 days strike and was involved in
parleys even on 2nd day of strike to reach an amicable settlement
without making it an issue of prestige and could bring a
settlement, thus helped the CLC to finalise the understandings
with UFBU leadership – to be so stubborn abruptly when it became
such a matter of importance in the industry and when a request
had come from the Management of State Bank of India to sort out
the dispute amicably;
 e. The membership of IBA consists of all the Banks – when it
comes to meet the expenditure of the conduct of the affairs of the
IBA, a major share is borne by the Management of State Bank of
India – which is contributed out of the profits earned by the
employees and Officers in the Banking Industry, but the words of
the Chairman of State Bank of India who is Deputy Chairman of IBA
as well, do not carry any extra weight.

16. We strongly feel that the major portion of the blame for the fiasco
that has been created in the Banking Industry will have to be borne by
the Indian Banks’ Association. They are also responsible for creating an
earlier confusion in the name of the directives of the Government that
the offer was reduced from 17.5% to 13% and forcing the industry to
observe 2 days strike which could have been avoided. Now with the
MOU, perhaps it would be creating yet another opportunity for the large
section of the workforce in the Banking Industry to launch bitter
agitation if these injustices are not sorted out by the concerned parties.
What is intriguing the leadership of the Federation is that, what was the
need for the Chairman of the IBA to rush through the MOU knowing well
that there are certain sensitive issues to be sorted out? A little bit of
patience would have averted industrial unrest in the Banking Industry.

17. Our attention has been drawn to circular issued by one of the
minority unions in the Banking Industry which claims credit for having
signed MoU by the retired employees of the Banking Industry and
commenting on the stand of the Federations in State Bank of India and
also claiming credit for the achievements of the current revision
exclusively for themselves. They are happy that they are successful in
making IBA and UFBU to sign a MoU on the death anniversary day of
their leader. It is ridiculous and insult to a great leader, whose name has
been drawn in the unfortunate event. We have no hesitation to proclaim
our philosophy that the leadership of the Officers should remain with the
serving Officers only. The Bank Officers have an excellent team of
leadership at all the levels and there is no need to depend upon those
who retired from the banks on superannuation. They are always
welcome to give their suggestions and advices. We also have seen the
legendary personalities in the Banking Industry. Com.L.V.Subramaniam,
the founder of the Bank Officers’ movement is from the State Bank of
India Officers’ Federation, followed by yet another legendary figure
Com.R.N.Godbole, whose contributions for strengthening of the Bank
Officers’ movement is part of the history of our movement. The other
iconic figure and a legend who scaled new heights in the last salary
revision by removing the age old malady of the discrimination of the
neutralisation of dearness allowance and the differentiation in the date
of the implementation of the salary revision Com.Shantha Raju, who was
the former convener of the UFBU under whose leadership the UFBU
achieved new heights of glory, also comes from our own banks. Com. P.
Laxminarasiah, Com. Y. Tarakanath and Com. Praful Kumar Patnaik are
also from State Bank of India. They trained and inspired hundreds of
leaders in State Bank of India to lead our movement and we are proud of
the philosophy that they have handed over to us over the last several
decades. They are equally capable of taking the frontline in the
movement but look at their visionary approach; they not only retired
with dignity and grace but also ensured a smooth succession plan in
their own organizations. Even now they are at the beck and call of the
services of the organization as volunteers but not to claim the leadership
and perpetuate the life long stay in the office ignoring the interest of the
serving members. We have been ignoring such vicious campaign
against our organization. But now we thought we should respond since
it questions the wisdom of our predecessors and their firm belief in the
philosophy that they have been advocating so far. It is for the members
of those highly capable leaders to ponder over these issues and not to
get confused by the statements which their leaders have been making
about the indispensability of the retired leaders and the successful
signing of the MOU by such leaders. The managements would definitely
be comfortable since they can make such leaders to toe the line of the
management even if it is at the cost of the interest of the general
members.
\

18. Comrades, we congratulate all of you for showing a tremendous

maturity and a sense of commitment towards the Federations. We are
conscious of the challenges ahead of us and the detractors who are
always ready to have a dig at the workforce of the State Bank of India at
every opportunity not only amongst the officials of the Government but
also our colleagues in the trade union fraternity. We are collectively
capable of resolving all the issues raised by us. We have no quarrel with
the State Bank Management nor our colleagues in other banks. But it is
for them to ponder over the issues that have been raised in this circular
dispassionately and come to their own conclusions. We wish to assure
each and every member of the Officers’ fraternity that we are interested
in their welfare and have struggled in equal measure in ensuring, their
demands are met adequately. It is now our turn to get the issue that are
relating to SBI exclusively sorted out to our mutual satisfaction. We
would have been happy if some of our colleagues had shown a little
patience and perseverance so that the interest of the entire workforce in
the Banking Industry including that of the State Bank of India could have
been resolved in an amicable manner.

19. The Steering Committee took stock of these developments and has
demanded an exclusive meeting with the management of State Bank of
India to resolve the current impasse. We are happy to inform all our
members that the Management has readily responded and has
convened a tripartite meeting on the 9th of December 2009 since we had
given a dead line of the end of December 2009 to sort out the whole
dispute and to come to an amicable settlement with the management of
State Bank of India. We are confident that given the maturity and the
statesmanship of the executives of State Bank of India – the issue could
be resolved in an amicable manner. However, that should not lead to
any complacency amongst our rank and file. They have to share these
developments with the colleagues from other banks in right perspectives
and also make our position clear to them so that there is no confusion in
the rank and file of all other banks. We also wish to make it clear that
the tripartite meeting is only a beginning to explore the possibilities for
resolving the stalemate and reaching an understanding and hence they
should be in readiness to jump into action at short notice.

With revolutionary greetings,

“OUR UNITY – ZINDABAD”

 (G.D.NADAF)
GENERAL SECRETARY