Mumbai: The country’s central bank, which has been busy tackling the fallout of a liquidity crunch as well as impact of high inflation all across India, has another critical problem on hand.
The Reserve Bank of India (RBI) with 22,000 employees, which likely makes it the No. 1 central bank in terms of staff, is facing staff wrath over management’s decision to reduce monthly pension payouts for around 8,000 employees by between Rs700 and Rs5,000 per retiree. These employees had retired before 1997.
RBI did the reduction by revoking a 2003 circular.
The bank’s decision comes against the backdrop of India’s still high inflation as well as the Sixth Pay Commission’s revision of both salaries and retirement benefits of most Union government employees, note those who are opposing the move.
Unpopular decision: On 10 October, RBI revoked a 2003 circular which had said that all its employees who retired before November 1997 would be eligible for upward revision of their pension benefits. Harikrishna Katragadda / Mint
The 2003 circular, prepared when Bimal Jalan was the governor, had promised that all RBI employees who retired before November 1997 would be eligible for upward revision of their pension benefits.
This meant that the monthly pension drawn by these employees would automatically go up with the wage revisions of the central bank’s existing employees.
For instance, someone who retired as a chief general manger would get the pension benefit to the extent an existing chief general manager’s salary is revised. RBI revises salaries every five years.
The note was revoked at the 14 August board meeting, the last meeting held by then RBI governor Y.V. Reddy. The revocation was made official on 10 October after D. Subbarao took over as governor.
“My monthly pension has come down by Rs728,” said one person who retired from RBI in 1993 as deputy general manager, but didn’t want to be named.
“The quantum of decrease depends on when they retired, their rank and the last-drawn salary,” said a senior member of the All India Reserve Bank Employees’ Association who also insisted he would rather not be named.
This body and the other three employee and officer associations of RBI, under the umbrella of United Forum of Reserve Bank Officers and Employees (UFRBOE), are the ones from within RBI battling the revocation.
Adding to pressure from the outside is the All India Reserve Bank Retired Employees’ Association.
“That governor Reddy passed a resolution on this matter in his last meeting is a betrayal of trust. Now he doesn’t have to face us,” said T.G. Nair, its general secretary who said the association had been urging the governor since August 2006, when the Union government had proposed the revocation, to keep it in abeyance.
RBI employees have their own superannuation fund to which RBI contributes 10% on employees’ behalf. Until 1990, RBI employees were enjoying two retirement benefits: gratuity and provident fund. At that point, the central bank offered to contribute 10% of a employee’s basic pay towards an pension scheme instead of contributing to the provident fund.
Unlike other government pensioners, RBI retirees’ pensions are not paid out of the government’s coffers.
The current employees are fighting for those who had retired before 1997 because they feel that if it can be done for the old employees, they will not be spared in the future.
All RBI employees went on a mass one-day leave on 21 October.
In an escalation, their associations have now called for another two days of mass leave, on 1 and 2 December.
A spokesperson for RBI declined to comment on the issue.