The government may be forced to offer another option to public sector bank employees, allowing them to move to pension benefits in lieu of provident fund. The move would put a Rs 5,000-crore additional burden on the bottomlines of the PSU banks annually.
The Indian Banks Association (IBA) and the trade unions are currently in discussion on the issue and are slated to come to a decision in three months.
At present, 2 lakh employees are under the provident fund net. The additional liability, which would occur, would be based on actuarial calculations. Public sector banks, based on the current employee-linked liabilities, may have to make a provision of Rs 20,000-25,000 crore in the next five years. At present, about 15-16% of the total cost is directed towards employees. The 27 PSU banks have about seven-lakh employee at present. Banking sources said depending on the employee strength of the bank, liabilities could vary from Rs 800 crore to Rs 1,000 crore.
However, PSU bank unions have demanded that all employees be given the option of choosing pension benefits in lieu of provident fund. ?Retirement benefits are crucial and the government and IBA need to realise this and act accordingly,? CH Venkatachalam, convenor, United Forum of Bank Unions said.
The unions have also put pressure on the IBA to look into the matter of recruitment. They have said that business growing the PSU banks must start their recruitment process.
The unions had earlier said that they would observe indefinite strike in case the government did not look into the matter.
Bankers said that with competition hotting up in the industry there is little room for PSU banks going in for frequent strikes. The total deposit base of the PSU banks, as on March 2007, was Rs 19,50,845 crore while advances were at Rs 13,77,652 crore. The total paid up capital of the PSU banks is estimated at Rs 11,691 crore.