MoF moves SC against pension scheme parity

Written by Indu Bhan | Indu Bhan | New Delhi | Updated: May 21 2013, 06:28am hrs
The Centre on Monday moved the Supreme Court against the Rajasthan High Court's order that asked it to bring parity between pension schemes of regional rural bank (RRB) employees and those of nationalised banks.

The ministry of finance claimed it would be inappropriate to load RRBs with the same pension benefits as those enjoyed by employees of other banks as the former were unable to sustain the additional burden.

Challenging the HC judgment, the MoF said the scheme is not feasible for RRBs as most of them have been thrice recapitalised and yet some RRBs continue to have negative net worth.

In this situation, it would be financially unviable for such RRBs to bear the burden of pension to its employees, which on a rough estimate would be at an additional national cost of R7,000 crore, it said.

According to the Centre, RRBs would not be in a position to bear such a large financial burden and consequently the implementation of the HC's directions would result in the winding up of several banks across the country.

A bench headed by Justice BS Chauhan asked the ministry to file its response to various applications filed by different RRB employee associations, which have been alleging that the government is trying to delay or deny pension schemes for them despite the pension parity orders by the Karnataka and Rajasthan HCs. The matter has been posted for hearing in the second week of July.

RRB employees had moved the HC seeking a direction to the government to maintain parity in pension payable to their staff with that of other commercial bank employees.

They had cited a Karnataka HC order of 2011 that directed the finance ministry to sanction pension to RRB employees and officers within a reasonable time.

The single judge of the HC on September 15, 2011, had asked the government to take steps to ensure that the modalities are worked out for a pension scheme in line with the pension scheme formulated for the employees of 58 nationalised banks in terms of the Memorandum of Settlement dated 29.10.1993 within six months.

Even the SC in 2001, in the case of South Malabar Gramin Bank Vs Co-ordination Committee of South Malabar Gramin Bank Employees' Union and others, had directed the government that as and when the pay structure of the nationalised commercial banks would get revised on the basis of any bipartite settlement, the central government was under obligation to take a decision so far the employees of RRBs were concerned; and such employees of RRBs were required to be treated on a par with employees of national commercial banks as regards the pay, allowances and other benefits.