Banks unable to bear pension burden: IBA

Indian commercial banks have expressed inability to bear huge burden of over Rs 26,000 crore emerging from bank unions demand to provide another chance for pension option to employees who did not opt for it in 1995.

"Pension cannot be offered in its present format as the burden will be enormous. This is a non-negotiable issue," Indian Bank's Association (IBA) Chief Executive H N Sinor said.

United Forum of Bank Unions has given a call for one-day strike on September 12 in support of demand for pension, compassionate appointment and stopping outsourcing of banking activities.

The bone of contention between the Indian Banks Association and various unions is mobilisation of additional funds required to cover nearly 2.8 lakh employees of 19 nationalised banks and the seven associates of State Bank of India (SBI) who did not opt for the scheme earlier in 1995.

Sinor said IBA had placed the additional requirement at Rs 26,000 crore, while unions have estimated that an additional provision of only Rs 4,700 crore would have to be made.

Public sector banks (PSBs) have asked the Centre to intervene as talks with bank unions for allowing half of their employees a second chance to opt for pension instead of provident fund have reached a deadlock.

On the issue of outsourcing, he said, "The Reserve Bank of India has told banks that they cannot outsource core functions such as sanctioning loans, management of investment portfolio and opening deposit accounts."

The eight bipartite settlement signed with unions in 2005 gave room to banks to outsource IT and speciliased services where in-house capabilities were not available, he added.