Strike today to hit banking services

Nineteen Nationalised Banks and some old private sector banks are likely to remain completely shut tomorrow as nearly nine lakh employees and officers would be on a one-day strike to demand pension benefits for all.

The United Forum of Bank Unions (UFBU) has called for the strike as management have rejected their demand for allowing employees another chance to opt for pension instead of the existing provident fund benefits.

This demand has cropped up after employees and officers at the country's largest bank, the State Bank of India (SBI) succeeded in making the government and the management agree to remove the Rs 4,500 a month cap on pension.

SBI employees on retirement will now get 40 to 50 per cent of the last salary drawn as pension depending on the rank at superannuation.

About 55 per cent of the employees of nationalised banks had opted for pension scheme in lieu of provident fund in the mid-1990s.

Others preferred to stay with the contributory provident fund as they felt the then prevailing high interest rates would fetch them amounts bigger than the pension payments.

The nationalised banks have estimated that they will need to shell out an additional Rs 13,000 crore if they agree to giving the employees another chance to opt for pension.

The management of banks have conveyed to the unions that the financial burden was unbearable.

"Under the new accounting standards (AS 15), banks will be required to provide for this amount in one go. This will put unbearable financial burden on the banks. Hence, this demand is not acceptable," a bank official said.

The funds that banks have to set aside for honouring existing pension commitment are growing every year owing to increase in life expectancy, revision in dearness allowance and promotions and consequent salary hikes. This itself is a stiff challenge for banks, the official said.