Sunday, July 25, 2010

Regional Rural banks will get pay at par with nationalised banks : Finance Minister

Finance Minister Shri Pranab Mukherjee has asked the Regional Rural Banks (RRBs) to bring their Non-Performing Assets (NPAs) below 5% by this year itself. Finance Minister also announced the wage revision of the pay-scale and allowances of the employees of the RRBscorresponding to those of Nationalised Banks as per 9thBipartite Settlement. The additional cost burden of the arrears on this account would be about Rs. 791 crores. He was addressing the annual review meeting of Chairmen ofRRBs and General Managers of Sponsor Banks, here today. Shri Mukherjee asked the RRBs to speed up their activities to expand their branches on platform of Core Banking Solutions. The Finance Minister emphasized upon use of new technology including Business Correspondents, mobile banking vans, tele-banking etc. to provide banking services to entire population of the country, especially in the rural areas.

Secretary Financial Services, Shri R. Gopalan, Deputy Governor RBI, Dr. K.C. Chakravarty, Chairman NABARD, ShriU.C.Sarangi and Additional Secretary, Financial Services, ShriRakesh Singh were also present on this occasion among others.

Following is full text of the speech delivered by the Finance Minister Shri Pranab Mukherjee on this occasion:

“I am happy to be here in the annual review meeting of Chairmen of RRBs and General Managers of Sponsor Banks. Such meetings are being organized regularly since January 2007 and have helped in preparing a realistic action plan for strengthening the RRBs on a sustainable growth trajectory.  I hope that this meeting will help us in further consolidating the efforts being made by the RRBs, Sponsor Banks, Govt Of India, NABARD  and the Reserve Bank of India.

As you are aware, the first batch of RRBs were established on2 October 1975 and their number gradually increased to 196 in 1986.  The RRBs were designed as unique financial institutions with exclusive focus on development of rural areas.  It was expected that these institutions would provide efficient financial services at affordable cost to the disadvantaged sections of the rural population. 

Government of India had initiated a series of measures in the recent years to strengthen the RRBs to emerge as strong financial institutions for meeting the financial needs of the rural population. In the wake of the announcement in the Union Budget 2007-08, 27RRBs which had negative networth as on 31 March 2007 have been recapitalized.  conducive policy environment has been created for expanding the branch network of RRBs.  The branch licencingnorms have been made flexible.  RRBs have responded to these measures and have opened 716 branches during the last 02 years.

For further improving the financial health of RRBs, the Government of India started the process of structural consolidation of RRBs by amalgamating RRBs sponsored by the same Sponsor Banks within the State.  The process of amalgamation is almost complete.  As on date, there are 82 RRBs (46 amalgamated and 36 stand alone) with a branch network of 15,475 branches covering 619 districts, 26 States and 01 Union Territory (Puducherry).

RRBs are expected to play a vital role in promoting financial inclusion in the country.  To achieve this objective, RRBs are being supported out of the Financial Inclusion Fund and Financial Inclusion Technology Fund set up in NABARD.  NABARD had launched a pilot project for facilitating Financial Inclusion with ICT in 15 RRBs.  The pilot project is expected to cover 150 villages in 30 districts of 14 States.  All RRBs need to draw up individual plans for financial inclusion in their areas of operation at the earliest and also adopt the BC / BF model.

I am happy to note that RRBs have shown improved performance in many areas.  The total loan outstanding of RRBs as on 31 March 2010 was Rs.83,562 crore whereas the deposits amounted to Rs.1,42,814 crore.  The ground level credit flow ofRRBs has improved from Rs.43,367 crore to Rs.56,268 crore thereby recording an appreciable growth rate of about 30%.  A significant part of their performance is substantial lending to the priority sector.  RRBs are mandated to lend 60% of their loans to the priority sector.  During the last three years, RRBs have not only achieved the target fixed for the purpose but have maintained priority sector loans above 80%.  I am also happy to note that RRBs have maintained their focus on agriculture as over 61% of the priority sector loans are for agriculture sector.  The RRBs have also improved the health of their credit portfolio as the net NPA has now reduced to 1.62%.  Only three RRBs are now making losses.

There is no doubt that the enabling environment created by Government of India, RBI and NABARD has helped the RRBs in improving their performance.  Still, there are many areas of concern.  30 RRBs had accumulated losses to the tune of Rs.1,808crore.  All weak RRBs need to chalk out a time bound action plan to wipe out the accumulated losses and simultaneously achieve all the prudential norms.

In the last review meeting held in August 2009, I had expressed concern that a very large number of RRBs continued to have low CRAR.  It was also observed during the review that some of the RRBs presently having reasonable CRAR would also be not able to maintain it on account of certain expenditure they might have to incur in the coming years for payment of enhanced wages and installation of CBS.  To address this situation, a Committee was set up under the Chairmanship of Dr. K C Chakravarty, Deputy Governor, RBI to analyse the financials of RRBs and suggest measures so that each RRB has atleast 9% CRAR by 2012.  The Committee has already submitted their report. The report is now under examination in consultation with NABARD and RBI.  I am sure the implementation of the feasible recommendations of the Committee would help the  RRBs to emerge as stronger financial institutions.

It is imperative that all RRBs embrace the latest technology for providing services to their customers.  I have been constantly laying emphasis that all RRBs in a time bound matter should have all their branches under Core Banking Solution.  I understand that 21 RRBshave now covered their entire bank branch network under CBS.  10 more RRBs are on the way to achieve full coverage of their branches under CBS.  However, it is a matter of concern that CBS is yet to take roots in 51 RRBs.  I would urge upon all the RRBs and their sponsor banks to attach utmost priority to CBS and in today’s meeting a time bound programme should be fixed for CBS implementation for each of the RRBs.

The sponsor banks also need to closely monitor the performance of their sponsored RRBs and provide timely guidance to them wherever necessary.  It has been brought to my notice that some of the sponsor banks have withdrawn the Chairmen of RRBsbefore the completion of their tenure.  Though the premature withdrawal must be for valid reasons, this could affect the performance of the RRBs in an adverse way, besides impacting the morale of the staff of RRBs.  I suggest that the sponsor banks take all precautions at the time of selection of Officers for the post of Chairman of RRB so as to ensure that they continue to guide theRRBs  for a period of at least three years. 

I understand that of the 46 amalgamated RRBs, 39 are now scheduled by Reserve Bank of India.  In case of 7 other RRBs, NABARD is required to undertake their inspection with reference to their annual accounts as on 31 March 2010.  I would impress that this process of scheduling the remaining banks should be completed at the earliest.

I have noted that RRBs (officers and employees) Service Regulations 2010 have since been issued by GOI and the process has been initiated by the RRBs for adoption of these regulations. The new Appointment and Promotion (officers and employees) Rules have already been issued on 13.7.2010 for publication in the Gazette of India. These measures should help in improving productivity and business of the RRBs.

Keeping in view the expectations from the RRBs, the training and capacity building of RRB Officers and Staff need to be given utmost priority.  A Committee set up for the purpose has identified a number of areas for capacity building of RRBs.  All the RRBs should prepare a comprehensive plan for meeting the training needs of its staff members.  A mechanism should be created for  providingfunding support to RRBs for conducting these training programmeduly involving NABARD, sponsor banks and the RRB itself.

In the light of the ninth bipartite settlement between the Indian Banks Association representing the managements of the Public Sector Banks and the United Forum of Bank Union representing the associations/unions of all PSBs, the wage revision of the pay and allowances of the RRBs has also been taken up. The additional cost burden of the arrears is likely to be Rs 791 crores ,which will bring down the total profits of the RRBs from Rs 2374crores , as on 31st March, 2010 to Rs 1615 crores , adjusting for the additional cost burden of arrears on the RRBs. This is likely to lead to more RRBs going into losses against only three loss making RRBsat present. Yet the Government is committed towards fulfilling its obligation of giving equal pay scales corresponding  to those of nationalized banks to the RRB employees.  I am happy to announce that we are fulfilling the Government commitment of giving  equalpay scales corresponding  to those of nationalized banks  to the RRB employees, as per Ninth Bipartite Settlement.

I look forward to our deliberations today and am sure that the gathering will have fruitful discussions and come out with pragmatic and innovative suggestions for further improving the performance ofRRBs.”

Source : PIB Press Release

As per the Notification issued by the Government of India, the implementation will take place as under:-
a)     Pay Scales and Dearness Allowance:- Pay scales and Dearness Allowances of RRB employees as on 01.11.2007 would be equal to the corresponding categories of employees of the nationalised commercial banks.  Pay for the purpose of DA, HRA and Superannuation benefits shall mean basic pay, stagnation increments, special pay, graduation pay, professional qualification pay and officiating pay, if any.
b)     House Rent Allowance (HRA) and City Compensatory Allowance (CCA): HRA and CCA would be payable at the same rate as applicable to the corresponding categories of employees in the nationalised commercial banks w.e.f. 01.11.2007.
c)      The sponsor bank shall negotiate the ‘other allowances’ with RRBs sponsored by them.
d)     The payment of revised salary and the arrears thereof may be made accordingly.
e)     The RRBs may issue a comprehensive order indicating the revised pay scale in respect of each category of employees after seeking the approval of their Board of Directors.


SNEHA said...

we will be happy if all benefits, available to sponsor bank staff,are passed on to RRB staff,

Jaya Kumar said...

This is the first time, RRB staff pay extended at par with sponsor bank with out hassle.But parity is not maintained in respect of other allowances as well as terminal benefits.We look forward that the above anomolies would be sorted out at the earliest.

C Jayakumar

neeta said...

this is a good step to join RRBs for new candidates this is good for RRBs also.

mukul said...

We RRBiens are very much happy with this announcement But parity should be maintained in respect of other allowances as well as terminal benefits

sanjay verma said...

The finance minister has finaly understood that RRB staff is moraly and judicialy (as per the NIT award and subsiquant decisons in supreme court)liable to get the salary and allowances at par with other public sector banks. but why again this time Honourabe FM has let the matter of other allowances go unattended by him.will this issue go again to Sponsor bank who on their part unnecessarily curtail the same . The finance ministory has not fulfilled its promise that orders will also be issued on othe allwance at par with commercial Banks in next wage revision.

RAJINDER said...


chandan said...



We reproduce hereunder Circular No.69 dated the 16th July, 2010 by All India State Bank Officers’ Federation, the contents of which are self-explanatory.

We congratulate all our officers for their tremendous faith and confidence in the Organization

1.The absorption of Farm Sector Officers appointed on contract basis in our Bank was an important matter which we have been perusing with the management for quite some time. Our latest correspondence addressed to our Chairman on 10th February -2010 has dealt with the matter elaborately, bringing out the relevant facts of the rigorous process adopted to screen the candidates before they were appointed on contract. As a testimony to this, these officers have performed exceedingly well, not only in their area but also in other jobs which bank entrusted to them owing to the perennial shortage of permanent officers in our Bank.

2. When Bank came out with a proposal to recruit exclusive cadre of POs (Rural) during January – February-2010, neglecting our genuine demand of absorption of these officers, we strongly pushed the matter further and demanded for addressing of the issue before the proposed recruitment of exclusive cadre of POs (Rural) is given effect.

3. We are extremely happy that Bank has finally agreed to consider absorption of MRO’s, TO (FS), CRE(PB), CRE(ME) on permanent basis. The ECCB has approved the proposal on 14.07.2010. The terms and conditions for absorption will be shared later.

4. We are sure that, the contract officers in farm sector will welcome this development with open arms. The AISBOF derives immense satisfaction from this historic achievement which provides the contract officers comfort and pride of joining State Bank family. We wish them bright future.

sailesh said...

RBI staff are going to get a 23 % increase in their salary, poor commercial bankers........

chintu said...

The RBI is not having leaders like UFBU who maintain double standards

chandan said...

Collective bargaining ninth bps also fetched around 23%.

chintu said...

For whom, to UFBU leaders

Dillip Kumar said...

we congratulate Hobl'Finance Minister
for hassel free implementation of 9th
bps in RRBS.Butwe r extremely disappointed that benefit of other allownces has been left once again in the hands of Sponsor Bank to play their nasty game

Dineshkumar said...

RRB staff is not getting other allowances as par with sponsor bank staff is a matter of concern there is also a limited chances of promotion I've completed 26 years in RRB as an officer but I'm not promotted even though I through the written test so more chances of promotion is necessary we the RRB staff is not getting terminal benefit at par with sponsor bank staff at present RRB staff get only Rs.1950 as pension on retirement. it should be at par with that of the sponsor bank staff so retirment life go easy

chandan said...

@ Dineshkumar August 8, 2010 8:48 PM:

Why with poor sponsored bank? Why not with RBI? Just replace one R with I.


Dillip Kumar said...

"We are extremely happy and thankfull to our Finance minister that new pay scale as revised (9th bipartite Settlement)has been directed to be implemented for RRB staff.But we are equally desperate to note that again the decision to implement the other allowances and terminal benefits have been left to the sponsore bank Authorities who are obviously not in favour of extending such benefits to RRB staff.the Finance minister has promised earlier that all other allowances will be passed on to RRB staff at par with other commercial banks in the next pay revision but did not kept his promise.we hope positive steps by the finance ministry in this regard."

RAVAL B.G.G.B said...

RAVAL FROM B.G.G.B.:- "We are thankfull to our finance minister as he had give the commitment to RRB staff for implementation of revised pay scale at par 9th bipartite settlement. We appeal F.M. to implement pension scheme in RRB staff at par sponsor bank who realy work in the RURAL area for RURAL development."

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