Tuesday, February 11, 2014

Bank Profits Used In Writing Off Bad Loans

Reports indicate that emboldened by FM's statement, now IBA decides to postpone 

Negotiating Committee meeting scheduled for 13th February 2014. Further Reports

 indicate that UFBU has been badly snubbed even after 2 days successful strike as 

CMD of IOB left for Sri Lanka without caring for negotiating committee meeting. IBA

 seems to have Zero commitment level towards Bank Employees. - Confirmed details 

awaited.

PSU bank strike: profits used to write-off bad loans, warn unions-The Hindu-11.02.2014

The banking industry’s profits are being used for writing off bad loans and for provisioning for bad loans. The employees are demanding a fair and just wage revision commensurate with the work load, risks and responsibilities, said a union official in Chennai on Tuesday.
“Finance Minister P. Chidambaram’s statement on Monday that bank profits cannot be used for wage hike is wrong. The profits of banks have been going up. The profits are being used to write off bad loans,” K. Anandakumar, senior vice president, All India Bank Officers’ Confederation (AIBOC), told IANS.
“In the last six years, a whopping Rs.141,294 crore of bad loans have been written off. During last five years Rs.140,266 crore have been provided towards bad loans from profits,” C.H. Venkatachalam, general secretary, All India Bank Employees’ Association (AIBEA), toldIANS.
“When it comes to our salary revision, managements are reluctant,” he added.
The union officials are unanimous that employees cannot be held responsible for the banks’ bad loans.
“Bank loan write-off is an industry by itself. The write-offs are very systematic and scientific,” a banker told IANS, preferring anonymity.
Over 10 lakh bankers across the country are on two-day strike — Monday and Tuesday — demanding wage hike and halting the banking sectoral reforms.
According to Anandakumar, the inflation is skyrocketing and the cost of living has gone up.
“The bank management has offered a hike of 10 percent which comes to around Rs. 3,115 crore. Even if the offer is 100 percent the total wage hike will be around Rs. 31,115 crore. On the other hand the write-off of bad corporate loans is several times over this,” Mr. Anandakumar remarked.
According to union officials, the wage revision in the banks sector is due from November 2012. The United Forum of Bank Unions (UFBU) comprising nine unions submitted its charter of demands in October 2012.
The Indian Banks Association (IBA) has been delaying the matter for the past one year.
As regards the clearance of cheques that have been held up due to the two-day strike, Mr. Anandakumar said it is for the banks to take up the issue with the Reserve Bank of India (RBI).

P. Chidambaram to bank staff: All profit can't be used to pay higher wages-Financial Express

 public sector bank employees started a two-day strike today seeking higher wages, Finance Minister P Chidambaram said the profit of banks cannot be used only to enhance salaries because there are other obligations.
"I will appeal to employees and officers of banks to recognise that banks profits, banks earnings have other claims. While claims of officers, staff and employees must be duly acknowledged, and a fair and just (wage) settlement is arrived at, there are other claimants to banks' profit," he said.
Chidambaram, speaking at the 78th foundation day of Indian Overseas Bank, said, "It cannot be that all profits are used to declare dividend and to provide enhanced wages and allowances to bank employees."
A significant part of retained earnings must be used to infuse additional capital, otherwise banks will not find the amount of capital that is required over the next 5, 10, 20 years, he said.
"The capital is to take care of a number of things. Firstly, banks are obliged to declare a dividend, both to the majority owner of the bank and the other shareholders," he said.
Another part of retained earnings has to be infused as capital in the bank for furthering its business, he added.
Public sector bank employees started a two-day strike today to press for a revision in wages.
There are 27 public sector banks in the country with a combined employee strength of about 8 lakh. There are about 50,000 branches of these banks across the country.

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