An Information contributed by Sri Sudhakar
Dear Sir,
1. I am enclosing a file RBIRBS2013 addressed and already sent to CGM RBI regarding fraud in pension fund of the bank employees.
You are already aware that Banks are not depositing 10% statutory liability in the pension fund and they are not deposing incremental cost of pension in the pension fund as agreed in 7th 8th & 9th BPS .
It is our endeavor to enlighten the bank employees regarding irregularities in committed by the management. We have already sent the communication (Hard Copy) to CGM RBI who has begun the Risk Based Supervision of 30 Bank w.e.f.1.09.2013. We request you to go through the communication and if agree then appeal all the retired /existing employees to send this letter to RBI Governor & MOF (Email given in the communication.). If your 70000 esteemed readers will read and act on it the things will change.
2. Are you aware that now CMD & ED are being paid revised pension of ED/ CMD grade from our pension fund?. GOI guidelines regarding payment of pension to CMD/ED of ED/ CMD grade has started from your pension fund.( GOI guidelines to pay pension to whole time directors o the Bank is enclosed for your ready reference.
You will agree that GM once resign from parent bank to become ED CMD of some other bank, his service from the parent bank is terminated and his retiral benefits were paid . He was getting pension from parent bank and salary of ED/CMD from new Bank. ED CMD are not the Bank employees . They are not governede by pension regulation. Bank employees service condition do not apply on the CMDs UFBU/IBA decide the wages upto GM level. How the ED/CMD can be paid pension from the pension fund of new Bank?
Please go through the MOF communication. I shall give a full article on the issue how our pension fund is being looted by ED/CMD. Today full time director have been given pension from your pension fund. tomorrow part time directors can be extended the benefit. We must take all measures to stop the loot of the pension fund.
We shall be in touch. I shall be highly thankful if you publish the article RBI RBS on your esteemed webisite and oblige
regards
Sudhakar
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The Shri G.Jaganmohan Rao cgmicdbsco@rbi.org.in 31.08.2013
Principle General Manager
Reserve Bank of India
Dept. of Banking Supervision
Central Office, World Trade Centre
Cuffe Parade
COLABA
MUMBAI- 400005
Sir,
Attn: Mr Jaganmohan Rao Are You Ready to do Risk Based Supervision to Certify the Falsified Balance Sheet Presented by the Bank Managements and give them Clean Chit.
Re: 1.Scams in Public Sector Bank Employees Pension Fund with Active Connivance of SCAs & RBI (The Regulator)
2. Perfunctory Risk Based Supervision / AFIR 2013 of 30 Banks by your team.
3.Case Study of Scam in SBI & Bank of Baroda Employees Pension Fund
When Aam Aadmi Party announced that HDFC/ ICICI Banks are indulging in large scale money laundering, it was alleged to be a wild charge. Cobra Post proved money laundering by both Private & Public Sector Banks.
Soon Aam Aadmi Party will release financial scam/ crime taking place in the PSBs & Bank employees Pension fund with the active connivance of the top Management/Auditors/ Regulators- Mr Rao are you ready?
Nature of the scam in Pension fund of -24- Public Sector Bank employees
Issue No 1 What are the Regulations
The PSB In exercise of the powers conferred by Clause (f) of sub section (2) of section 19 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970) the Board of Directors of Banks after consultation with the Reserve Bank of India and with the previous sanction of the Central Government hereby makes the regulations, called Bank Employees Pension Regulations.
Pension Regulation 7 which talks about the Composition of the Fund:
- The contribution by the Bank at the rate of ten per cent per month of the pay of the employee;
- The accumulated contributions of the Bank to the Provident Fund and interest accrued thereon upto the date of such transfer in respect of the employees;
- The amount consisting of contributions of the Bank along with interest refunded by the employees who had retired before the notified date but who opt for pension in accordance with the provisions contained in these Regulations;
- The investment in annuities or securities purchased out of the moneys of the Fund and interest thereon;
- Amount of any capital gains arising from the capital assets of the Fund;
- The additional annual contribution made by the Bank in accordance with the provisions contained in Regulation 11 of these Regulations;
- Any income from investments of the amounts credited to the fund;
- The amount consisting of contribution of the Bank along with interest refunded by the family of the deceased employee.
Mr Rao it is obvious that RBI is party to Pension regulations adopted by PSBs and can not claim its ignorance Copy of the Pension Regulation Enclosed).
Issue No 1. What are the violations of the Regulations: PSBs have not deposited the amount as per pension regulations:
- Whether Banks have deposited their contribution @ ten per cent per month of the pay of the employee as given in pension regulation 7(a) above?
- Bank employees /IBA/Bank agreed for reduction the wages of employees and officers to the extent of incremental cost of pension and agreed that incremental cost of pension will be transferred to pension fund trust detailed as given below.
- As per 7th BPS from 01.11.1997 to 31.10.2002, incremental cost of pension was agreed 16.50% to be shared by Management share 8.25% + employees share 8.25%
- As per 8th BPS 01.11.2002 to 31.10.2007 the incremental cost was advised as 18.50% which was to be shared 9.25% by employees and 9.25% by management.
- As per 9th BPS 01.11.2007 to 31.10.2012 the incremental cost was advised as 26% which was to be shared 13% by employees and 13% by management.
Specific case of violation and fraud in Bank Employees Pension Fund - Issue No 1
- None of the Public Sector Bank has deposited the incremental cost of the Pension as agreed above since 01.11.1997 Listed at point No c, d and e above. They CMDs inflated the profits to loot the incentive of Rs 8-10 lacs as per SOI Targets fixed by MOF.
- Bank of Baroda instead of deposited the 10% of basic pay p.m. during 2009-10, in fact the CMD/CFO/GM HRM of the Bank dipped in the pension fund and withdrawn Rs 46.99 cr (a clear case of violation of pension regulations) to inflate the Bank profit as per the table given below:
Table based on last -5- years Annual Report of the Bank showing fraud in pension fund
Year
(A)
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Rs 901 cr amortized on 07.12.2007 to taken in P/L in -5- years up to Mar 12 (B) In cr
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Rs 1829.90 amortized as on March 2011 to be taken in next -5- years from March 2011 (C) In cr
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Current Year contribution as per pension regulation
(D) In cr
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Total Profit & Loss Impact during the F-Y See Annual Report
(B+C+D) In cr
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2007-08
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180.20
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Not Applicable
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187.89
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367.89
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2008-09
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180.20
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Not Applicable
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298.52
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478.52
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2009-10
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180.20
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Not Applicable
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(-46.99)*
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133.21
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2010-11
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180.20
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365.98
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546.18
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1007.31
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2011-12
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180.20
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365.98
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125.70
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671.88
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Total
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901.00
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To continue till March 2015
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The analysis is based on -5- Annual Report (RBI has already conducted the AFIR each year)
Issue No 1 Aam Aadmi Party Observation
- Aam Aadmi Party stand by each employees and is very clear that RBI should ensure that all PSBs deposit the 10% of basic pay in the pension fund every month as provided in the Pension Regulations ( the regulations have RBI approval and sanction of the Parliament .
- Aam Aadmi Party also agree that all PSBs must deposit incremental cost of the pension as agreed in 7th 8th and 9th BPS
- Aam Aadmi Party is convinced that in the Year 2009-10 instead of depositing Rs 180.20 as per RBI amortization guidelines dated 07.12.2007, Bank has played a fraud because they dipped in the pension fund and withdrawn Rs 46.99 cr to boost the bank’s profit to Rs 3058 cr
- Aam Aadmi Party agrees that when the Bank contribution during 07-08 is 187.89 cr & during 2008-09 it is 298.52 cr how it can be negative (-46.99 cr ) in 2009-10. This prove the fraud on pension fund by not depositing statutory 10% as per pension regulations plus incremental cost as per 7th 8th & 9th BPS. CMD/CFO/GM (HRM) even dipped in the pension fund to boost the profit.
- How the Bank contribution can go down again in 2011-12 to 125.70 cr when more no. of employees have joined in 2010-11 as per 2nd pension option. It prooves scam in the pension fund.
- Mr Rao: Whether RBI keep their eyes shut during AFIR March 2010 -11-12 on above and allowed fraud on balance sheet by CMD/ CFO & GM (HRM)
- Mr Rao: Whether RBI is party to above violation of Pension Regulations
Issue No 2 What are the Regulations
Pension Regulation 11 talks regarding Actuarial investigation of the Fund.
The Bank shall cause an investigation to be made by an Actuary into the financial condition of the Fund every financial year on the 31st day of March and make such additional annual contributions to the Fund as may be required to secure payment of the benefits under these regulations: Provided that the Bank shall cause an investigation to be made by an actuary into the financial condition of the fund. As on the 31st day of March immediately following the financial year in which the Fund is constituted.
Issue No 2. What are the violations of the Regulations:
Mr Rao RBI has given the following observations on Actuarial valuations accepted by the CMD/CFO & GM (HRM)
For The last -5- years RBI observations are: The actuarial assumptions of 2% escalation of basic salary and DA each, based on the inflation rate of 4% was out of sync with the actual inflation trend of above 8% throughout the year or 7.99% during 1969-2010.. The additional liabilities owing to above lacunae and funding thereof would have significant impact on the bank’s financials. (Action-Critical) Copy of your observation enclosed
Issue No2 :Aam Aadmi Party Observation
AAP has received the AFIR of last -5- years of all the PSBs and observed that No Action by PSBs CMD has been taken because they are party to fraud. Mr Rao & Dr Balu will you again accept the pension provision based actuarial assumptions of 2% escalation of basic salary and DA each, based on the inflation rate of 4% (Current year some banks have increased from 4% to 6%) which you know is out of sync with the actual inflation trend of above 10% throughout the year or 7.99% during 1969-2010,?. Aam Aadmi Party is keeping a close eye how long you keep your eyes closed to these frauds on Employees Pension Fund. Whether you Action-Critical is compliance oriented or just for record?
Issue No 3 Amortization of the Pension Liability
RBI circular No DBOD.No.BP.BC:80/21.04.018/2010-11 dated 09.02.2011 permitted amortization of enhanced expenditure of pension liability on account of new pension option under 9th BPS and amendment of Payment of Gratuity Act 1972 to banks, at the request of IBA vide your guidelines on Prudential Regulatory Treatment. Accordingly PSB amortized liability of Rs 19611.57 cr as on 31.03.2011 detailed as under (Data is based on published result as on 31.03.2011)
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Issue No3: Aam Aadmi Party Observation
- RBI has no authority to allow violation of Pension settlement/ violation of pension regulations which have been approved by parliament?. Are you allowing Banks to make breach of the settlement arrived with their unions?. If you have power to allow breach, show your powers, be transparent and do not hide behind the shield of Financial Stability of the Banking System. Nothing is/will remain under the carpet.
- By allowing amortization RBI has violated the sanctity of the 9th BPS & Pension settlement & Pension Regulations which have been consulted by RBI & approved by the Parliament
- By allowing amortization RBI has denied Rs 19611.57 and future accruals on this amount, which legally due to the Pension Fund, caused loss to the pension fund trust, there by cheating the pension trust with a criminal intention to deny updation of pension to the pensioners.
- What is he meaning of amortization?. When employees have deposited their share out of agreed pension liability in the pension fund, why RBI has allowed Banks to violate the settlement by not depositing Rs 19611.57 cr in pension fund?.
- By allowing amortization RB has allowed Banks to violate the accounting principles laid down by ICAI which too has a parliamentary approval.
- Can RBI allow to amortize the Income Tax Liability/ Provision Depreciation/ Provision for NPA in Banks to enable them to avoid the impact on profitability and allow them to declare higher profits? Is it a fare and transparent balance sheet?
- The SBI has paid Rs 67464 cr as interest on deposit as on 31.03.2013. Mr Rao Whether RBI has powers to amortize this amount to boost the profit of SBI from 14000 crs to Rs 80000 cr because country finance is under mess.? Then why selectively pension liability can be amortized?. Whether FDR a/c holder be denied the credit of interest earned in his account which will not be breach of contract?.
- Amortization means that the beneficiary i.e. Pension trust will receive the amortized amount to the debit of fictitious asset (suspense) but the bank will absorb in their profit and loss in a period of 5 years. This accounting fraud is still continued.
- Mr Rao: Whether your Team & RBI is party to above scam in the Pension Fund
Issue No 4 SBI Pension Scam
SBI CMD declared a shortfall of Rs 10400 crores in the pension fund of the SBI employees. They transferred Rs 7927.41 crs from General reserve to Pension Fund as on 31.03.2011 as permitted vide RBI DBOD/BP/No16165/21.04.018/2010-11 which pertains to previous years as per note -8- attached to balance sheet It clearly reveals the following:
Issue No4: Aam Aadmi Party Observation
- In the previous years the bank actuaries have given false valuation on pension liability as mentioned above. How the pension liability can go up from Rs 1306.70 cr as on 31.03.2010 to Rs 11707 cr as on 31.03.2011(Rs 1306.70 cr +7927.41 +2473) in one year alone.
- It clearly proves that the profit and loss and balance sheet of the bank was falsified. It was not fair and transparent balance sheet of the bank during past several years. Pl. note that such practices were non-compliant with International Financial Reporting Standards.
- The liability on account of pension fund was not deposited in pension fund and it was distributed as divided to investor.
- SBI CMD has again declared a shortfall of Rs 10000 crores in the pension fund of the SBI employees in Oct 2012 (See the circular issued by SBI employees/UFBU.
- Why RBI has chosen to ignore the fraud committed by SBI chairman during last 4 to 5 years for showing bloated/inflated profits , higher dividend/higher ROA/ ROE/ higher book value took investor or ride, looted them?. Whether AFIR conducted every year by RBI was an eye wash? Why Chairman/ ED was allowed to loot incentive of Rs 10 lacs when profits were manipulated and he has not achieved the target set by MOF in SOI
Mr Rao: Whether Team & RBI is party to above scam in the Pension Fund of SBI Employees
Issue No 5 Banks issuing circular violating the Pension Regulations
CFO Bank of Baroda has issued a circular no BCC:BR:105/100 dated 10.03.2013 for annual closing and to finalize the Balance Sheet. As per point No 8.3.1 “Pension liability is a defined benefit obligation and is provided on the basis of actuarial valuation method made at the end of the financial year for the employees who joined the bank up to 31.03.2010.
Aam Aadmi Party Observation on Issue No 5
Please note that above circular is a fraud on the Bank Employees Pension Fund Trust because it violate the pension regulations which have your approval and parliamentary sanction.
Issue No 6 Provision for Pension Laibility due to Adverse Judgment against the Banks where Writs are pending in Various High Court/ Supreme Courts
- WP No 50002/50000 of 2006/ 9952/14983/6632 of 2007 3198 of 2007 in Madras High court decided on 14.12.2012, directing banks to pay 100% neutralization of DA to all retirees, retired prior to 01.11.2002. Canara Bank/ BOB are trying to wriggle out of the issue in Supreme Court and they are violating the National Litigation Policy.
- Resignees who were denied pension have won the case in several high courts..
- Pending WP in various HC for refund of the incremental cost of pension recovered from the employees in 7th 8th 9BPS. Which violate the pension regulations.
- Several WP in HC/SC numbering 13000 are pending on the pension issue.
Mr Rao have you ensured that the Bank have made adequate provisions, where ever they have lost the writ in High Court or Supreme Court in the pension / staff matters.
Issue No 7 Revised Pension to Board Level employees GOI Notification
The GOI has allowed CMD/ EDs the revised pension from the Banks they are retiring as CMD/ED. The direction violate the pension regulation because ED/CMD are not the employees of the Bank. Hence any pension payment to them is illegal.
AAP stand is that CMD not the employees of the Bank Hence he can loot the pension fund.
"employee" means any person employed in the service of the Bank, whether as a workman on full time work on permanent basis or on part-time work on permanent basis on scale wages or as an officer and who opts and is governed by these regulations, but does not include a person employed either on contract basis or daily wage basis or on
consolidated wages;”
Action to Be Taken By AAP together with Cobra Post.com
- Aam Aadmi Party and there team has closely monitored the March 2013 balance sheet of all the PSB. The RBS (AFIR) by RBI will also be under our close examination.
- Based on the above Pension data together incremental cost of pension along with interest thereon, the Scam in the PSBs employees pension fund is more than one lac crores. The figure is based on facts and is not a hyperbole. The fraudulent systemic risk will not be allowed by Aam Aadmi Party. We will take up this scam with CBI Chief/ CVC, Law ministry for investigation under SFIO, Labour Ministry for violation of labour laws( i.e 7th 8th & 9th BPS),very shortly.
- Our legal cell (CIPIL) will file PIL in the Supreme Court for unearthing/ monitoring of the biggest financial scam taking place in the pension fund of 14 lacs retired & in serving bank employees . CIPIL will insist for SC monitored CBI investigation. This communication is being sent to you with intention to prove your active connivance in the perpetuation of the fraud on the Bank employees pension fund.
- According to RBI's financial stability report, the expected additional liability for 24 public sector banks was Rs 30,366 crore, which constituted 81.9 per cent of their net profit for 2009-10. Indian Banks' Association has been mandated by RBI to prepare a pension scheme to facilitate the assessment by banks and help provide adequate provisions for such liabilities.”
Question: Whether Why RBI has ensured that Statutory & Regulatory Compliances are followed by Public Sector banks for above pension liability?. Whether RBI Compliance Policy is worthless when the banks are violating the law settled by BPS, which have a parliamentary sanction? Whether RBI is choosing to ignore the fraud committed by Chairman on pension fund & showing bloated/inflated profits , higher dividend/higher ROA/ ROE/ higher book value took investor or ride, looted them?. Whether AFIR conducted every year by RBI was an eye wash? Now RBS will be another eye wash/perfunctory? Mr Rao should be ready to face the media glare upon our exposure in public domain.
Sudhakar Rao
AAP Mumbai Chakala (AndheriE) Office VishwananakBldg.-B,Sangita Apartments, Hargovindji Marg, GuruNanakadi, Above Model Co-op Bank, Opp. Skoda Showroom, ChakalaNaka,
Andheri (E), Mumbai 400 093.
Andheri (E), Mumbai 400 093.
E mail address of MOF
MOF
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E mail address of RBI
governor@rbi.org.in
Email address of CMDsCGM SBM; chairman SBI; cmd Allahabad Bank; cmd Andhra Bank; Chairman & Managing Director [CMD]; cmd Bank of India; cmd bank of maharashtra; CMD Central Bank; cmd Corporation Bank; cmd Dena Bank; cmd Indian Overseas Bank; cmd Oriantal Bank of Commerce; cmd Punjab & Sind Bank; cmd Punjab National Bank; cmd Syndicate Bank; cmd uco bank; cmd union bank; cmd United Bank of India; cmd Vijaya Bank; cmd@allahabadbank.co.in, cmd@allahabadbank.in; cmd@allahabadbank.in; cmd@psb.org.in,cmd@psb.org.in; cmdscrt Canara Bank; cmdsec Indian Bank; md SBH; PRO Central bank; psmd SBBJ; psmd SBP; SB mysore
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