Govt asks public sector banks to finalise next wage revision before 1 November

In a communication to CEOs and MDs of the state-owned banks, the finance ministry advised them to initiate the steps for smooth conclusion of next wage revision

New Delhi, April 9 (PTI): The finance ministry has asked the heads of public sector banks (PSBs) to finalise the modalities for timely implementation of the next pay revision from November.

There are 21 public sector banks, post merger of six lenders with State Bank of India (SBI), in the country. They together employ about 8 lakh people.

In a communication to CEOs and MDs of the state-owned banks, the ministry advised them to initiate the steps for smooth conclusion of next wage revision of the employee within the time-frame. “However, it is seen that several banks are yet to proceed in the matter,” it said, requesting the PSBs to “look into the matter and conclude the next wage revision prior to the effective date of 1 November 2017”.

The wage revision of public sector bank employees takes place every five year. The last revision was effected in November 2012. In the last wage negotiation between PSU banks employee unions and bank management, Indian Banks’ Association (IBA) had settled at 15% hike. Recently, Banks Board Bureau chief Vinod Rai had made a case that the compensation package across the board of public sector banks needs to be improved.

“Maybe, we are not able to do much with the fixed part of compensation package but (with) variable part we are hopeful that in the next financial year (2017-18), we will be able to introduce a far more attractive package which do have bonuses, ESOPs and other performance linked incentives as part of the package,” he had said. Rai has also suggested that managing directors of the public sector banks should be appointed for minimum 6 years.

PSU banks decide not to hike rates

Jaipur/ New Delhi/ Mumbai, July 16: You need not worry about an increase in your equated monthly instalments after RBI’s late night action on Monday. The finance ministry has leaned on public sector banks that control around 70% of the business against raising rates to keep a large constituency of middle class and corporate borrowers pacified ahead of key elections. After all, for over a year now, the finance ministry has been prodding RBI to cut rates, while the central bank has refused to toe the government line. Instead, on Monday it signalled a reversal in policy to offset the impact of the weakening rupee by announcing several measures that will push up the cost of funds for banks.

While there were expectations of banks responding with hikes in the coming days, the finance ministry swung into action and impressed upon banks to maintain status quo.

By evening the impact was visible as banks started issuing statements, saying rates will not go up. “The measures taken by RBI are designed to curb speculation in the market and are not seen by SBI as indicative of any systemic problem or deeper malaise. It is, therefore, expected that the position in the market will stabilize shortly. Hence neither the management nor the board of SBI that met on Tuesday in Mumbai felt that this requires any adjustment of lending,” State Bank of India said in a statement. Taking a cue from the largest lender, others including Punjab National Bank, Bank of Baroda and IDBI Bank followed suit.

Earlier on Tuesday, finance minister P Chidambaram seemed to lay down the ground rule. While kicking off a pre-election campaign on government schemes, Chidambaram said he did not expect banks to raise interest rates. “These measures are intended to quell excessive speculation in the forex market, reduce volatility and stabilize rupee. They should not be read as a prelude to any policy rate changes,” he said. Admitting that the high current account deficit has made the rupee weaker, the finance minister said, “Given the current account deficit and the inflation, some depreciation of the rupee is expected. But sometimes there is excessive speculation in the foreign exchange market and the role of RBI is to ensure that volatility is cut.

The tight liquidity situation due to the recent measures raised concerns of growth being impacted. But the finance minister allayed such fears. “These measures will in no way affect our commitment to growth. We must increase credit delivery and stimulate growth.” He reeled off a number of reforms and initiatives taken by the government in the last four months to revive growth and reverse the policy paralysis that has stalled projects approvals.