WEEKEND LIGHTER: JUSTICE DENIED IN RESERVE BANK OF INDIA

WEEKEND LIGHTER: Justice denied in RBI
(November 4/5, 2017)
Feel free to mail your views on this edition of WL to mgwarrier@gmail.com

Section III
A “rejected” review


I

Cover Story

Justice denied in Reserve Bank of India


This refers to Anup Roy’s report “RBI employees stage protests on pension issue” (Business Standard, November 3). RBI employees/retirees have been holding public protests demanding pension revision for the last twelve years.
Pension scheme (on the same lines as central government pension scheme) in lieu of Contributory Provident Fund(CPF) was introduced in RBI effective January 1, 1986. The RBI Pension Regulations contained built-in provisions for periodic revisions in pension whenever wage revision was effected for serving employees. This was reiterated by the Bank in a circular dated March 13, 1992 when employees hesitated to opt for pension surrendering their accumulations in CPF. RBI revised pension thrice, effective November 1, 1987, 1992 and 1997 following wage revision for serving employees. Due to some misunderstanding at lower levels in the Finance Ministry, GOI imposed an unwritten ban on further revision of pension in RBI, starting November 1, 2002.
 RBI has created its own pension fund which is augmented annually based on actuarial valuations and reckoning increased needs arising from periodic revisions. The fund’s corpus has crossed Rs10,000 crore mark* in 2015 and adequacy of resources doesn’t stand in the way of pension revision in RBI.
Several Supreme Court judgments have recognized that wage and pension revisions are inseparable from each other and, recognizing this principle, GOI has revised the pension of its own employees after last pay revision. Viewed in this context, GOI should remove the unwritten ban on RBI pension revision imposed since 2002 and avoid further escalation of unrest among the RBI employees and ameliorate the grievances of RBI retirees, many of whom are on the wrong side of 70 years.
In his book “I Do What I Do” released recently, Dr Raghuram Rajan lamented:
"...On the internal front, my biggest regret is that I could not solve a long-pending matter that I inherited from my predecessors: securing for retired RBI staff the same pension benefits that government employees enjoy, despite repeated assurances from the government that the matter would be addressed. I hope the government will do the right thing here..."
Let us join Rajan’s prayers!
M G Warrier, Thiruvananthapuram
*Excerpts from The Hindu Business Line report dated January 5, 2016 by Vinson Kurian:
“Several judgments from the Supreme Court — beginning with the Nakara case — have recognised that wage and pension revisions are inseparable from each other, the forum contended.
Nakara case

The Nakara case of 1982 is considered a landmark in the history of pension rights. Earlier too, another Constitution Bench of the Supreme Court had declared pension a ‘basic right’ of pensioners. But in RBI, the pension updation, following wage revisions in 2002 and 2007, has remained unresolved.
This is even as talks for wage revision in 2012 are reportedly in the pipeline.
The apex bank is still awaiting final approval from the Ministry of Finance, C Rajagopalan, a retired assistant general manager and president of the Forum, said.
The RBI central board is empowered to grant updation in terms of Regulation 5 of the Pension Fund Regulation, 1990, read with Sec 58(2) (j) of the RBI Act, 1934.
Therefore, the bank’s reference to the Centre for approval is unfortunate, pensioners feel.
Own corpus

In contrast, the RBI has its own corpus aggregating
10,782 crore (as on June 30, 2014), which includes pension updation benefits, Rajagopalan pointed out.
This apart, progressive increase in transfer of working surplus of 65,896 crore (2014-15) is unprecedented and is unmatched in any public sector institution or the corporate sector.
In view of this, the Finance Minister should convey final approval for pension updation for immediate implementation and with retrospective effect, Rajagopalan said.”
II

SOME USEFUL LINKS






RBI welcomes PSBs recapitalization plan*

RBI welcomes bank recapitalization plan A well-capitalized banking, and in general, financial intermediation, system is a pre-requisite for stable economic growth. Economic history has shown us repeatedly that it is only healthy banks that lend to healthy firms and borrowers, creating a virtuous cycle of investment and job creation. The Government of India’s decisive package to restore the health of the Indian banking system is in the view of the Reserve Bank of India (RBI), a monumental step forward in safeguarding the country’s economic future. For the first time in last decade, we now have a real chance that all the policy pieces of the jigsaw puzzle will be in place for a comprehensive and coherent, rather than piece-meal, strategy to address the banking sector challenges. It bodes us well that this step has been taken in a time of sound macroeconomic conditions for the economy on other fronts. The proposed recapitalisation package for the banking sector combines several desirable features. First, by deploying recapitalisation bonds, it will front-load capital injections while staggering the attendant fiscal implications over a period of time. As such, the recapitalisation bonds will be liquidity neutral for the government except for the interest expense that will contribute to the annual fiscal deficit numbers. Second, it will involve participation of private shareholders of public sector banks by requiring that parts of the capital needs be met by market funding. Last but not the least, it will allow for a calibrated approach whereby banks that have better addressed their balance-sheet issues and are in a position to use fresh capital injection for immediate credit creation can be given priority while others shape up to be in a similar position. This provides for a good way of bringing some market discipline into a public recapitalisation program compared to the past recapitalisation programs. Financial sector policies should support growth while maintaining financial stability. On behalf of the Reserve Bank of India, I commend the government on its bold steps in this direction, starting with implementation of the Insolvency and Bankruptcy Code that is helping resolve the underlying corporate stress, and culminating in yesterday’s announcement of the public sector bank recapitalisation program. The RBI looks forward to working with the Government to ensuring these plans reach their natural completion to the benefit of the broader Indian economy.
(Urjit R. Patel)
 Governor
*Source: RBI Website

III
a “rejected” review!



The Correct Diagnosis*
Muhammad Yunus has brought in one place several concerns affecting the poor and the deprived. Governments, through ages, world over have been, "For the Rich, By the Rich and Of the Rich". In this book, the author has proved this universal truth, using statistics produced by the RICH! As a corollary, one is tempted to add that laws are legislated to protect the interests of the rich. What other explanation one can find for the 2 percent CSR? A rational bench mark for CSR could be 50 percent or more of surplus income generated by goodworking corporates. That aside, diagnosis of factors stifling efforts to eliminate poverty, improve literacy and provide reasonable universal healthcare and boldly expressing views unpalatable to the establishment will wake up "We The People" and once public awareness about citizens' rights increase, solutions to the problems of the poor and the deprived will emerge, hopefully.
Usually, once one gets celebrity status, great men start speaking the language of the establishment. Here is an exception in Muhammad Yunus.
M G Warrier Thiruvananthapuram
*Review of the book "World of Three Zeros" by Muhammad Yunus which didn't satisfy the T&C of Amazon. This version of my review was rejected. A revised review was accepted.Open the link above to read published version. 

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