"I will appeal to employees and officers of banks to recognise that banks profits, banks earnings have other claims. While claims of officers, staff and employees must be duly acknowledged, and a fair and just (wage) settlement is arrived at, there are other claimants to banks' profit," he said.
Chidambaram, speaking at the 78th foundation day of Indian Overseas Bank, said, "It cannot be that all profits are used to declare dividend and to provide enhanced wages and allowances to bank employees."
A significant part of retained earnings must be used to infuse additional capital, otherwise banks will not find the amount of capital that is required over the next 5, 10, 20 years, he said.
"The capital is to take care of a number of things. Firstly, banks are obliged to declare a dividend, both to the majority owner of the bank and the other shareholders," he said.
Another part of retained earnings has to be infused as capital in the bank for furthering its business, he added.
Public sector bank employees started a two-day strike today to press for a revision in wages.
There are 27 public sector banks in the country with a combined employee strength of about 8 lakh. There are about 50,000 branches of these banks across the country.