The government today asked regional rural banks (RRBs) to introduce revised pay structure for their employees, on par with PSU banks, with effect from November 1, 2007, which will cost them Rs 791 crore on arrears payment and push more of them into losses.
“For quite some time, staff and employees of RRBs were agitating that their pay structure should be brought on par with the commercial banks. We have agreed. I have requested RRBs to implement this new pay structure, which will cost Rs 791 crore to pay their arrears,” Finance Minister Pranab Mukherjee told reporters after meeting heads of RRBs.
He said the additional cost on payment of arrears would bring down the total profits of the RRBs from Rs 2,374 crore in 2009-10.
“This is likely to lead to more RRBs going into losses, compared to only three loss-making RRBs at present. Yet, the government is committed towards fulfilling its obligation of giving to RRB employees pay scales corresponding to those of nationalised banks,” he said.
At present, the country has 82 RRBs with over 68,000 employees. The finance minister also asked 49 RRBs that have more than five per cent non-performing assets, to bring down their bad debts below 5 per cent within this year.
Stressing on their role towards financial inclusion, he called upon RRBs to speed up their activities to expand their branches on the platform of core banking solutions.
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