The Eighth Pay Commission has generated expectations of a salary and pension revision among Central government employees who, along with pensioners, are also looking forward to a bonanza. However, retired employees of public sector banks (PSBs), which are largely owned by the government, are complaining that, while government employees and pensioners see periodic pay commission revisions, their basic pension structure has not been updated for almost three decades.
The lot of the PSB retirees is also different from that of other PSUs, where retirees’ pensions are governed by the Employees Pension Scheme 1995 for older employees and the National Pension Scheme for those who joined on or after 2004. Many PSUs have independent pension trusts with Industrial Dearness Allowance patterns similar to Central rules. Pensioners often get 50 per cent of the minimum pay in the revised pay scale, with allowances based on the specific company’s rules.
The Co-ordination of Bank Pensioners & Retirees Organisations (CBPRO) and the All India Bank Pensioners and Retirees Confederation (AIBPARC) are key advocacy groups fighting for bank retirees’ rights, including pension updating, improved family pensions and parity with Central Government/RBI pensioners. These groups have been periodically taking up issues with the Department of Financial Services, government of India, and Indian Banks’ Association. The matter has now reached the Supreme Court.
The issue found its echoes in in Parliament as well, where the government has clarified its position on whether there are plans to revise the basic pension of PSB retirees. The questioner wanted to know that, as some financial institutions have approved pension increases, will a similar revision could be considered for retirees of PSBs?
Pankaj Chaudhary, minister of state for finance, confirmed that pension revisions have been approved in some financial institutions. According to him, the government has approved a 10 per cent increase in basic pension plus dearness relief for retirees of the Reserve Bank of India (RBI). This increase applies to all pensioners who retired before 1 November 2022. For NABARD retirees, pension revisions were carried out earlier in phases. Pension for retirees before 1 November 2012 was revised with effect from 1 March 2019. Pension for retirees before 1 November 2017 was revised with effect from 12 June 2023. However, the government said that no proposal has been received for revising the pension of NABARD retirees, who retired before 1 November 2022.
Retired employees of public sector banks have been demanding updating of their basic pension for many years. The government clarified that pension in public sector banks, which includes State Bank of India (SBI) and 11 nationalised banks, is governed by specific regulations. For SBI employees, pension is governed by the State Bank of India Employees’ Pension Fund Regulations 2014. For employees of nationalised banks, pension is governed by the Bank (Employees’) Pension Regulations 1995, which were approved by the respective bank boards. According to the government, these regulations do not include any provision for revision of basic pension. While basic pension is not revised, pensioners do receive Dearness Relief (DR).
Monthly ex gratia
DR on pension is revised every six months. This adjustment helps offset the impact of inflation. In addition, under the XIIth Bipartite Settlement and IXth Joint Note, banks are also paying a monthly ex gratia amount. This payment is available to pensioners and family pensioners, who became eligible to draw a pension on or before 31 October 2022.
After the Finance Ministry’s response in Parliament, it became clear that no proposal is under consideration to revise the basic pension of public sector bank retirees. The government has said that pension will continue to be governed by the existing pension regulations, which do not allow for such revision.
The retirees see another reason for the government turning down their demand – growing dependence on contract workers. The employee count of PSBs was 757,641 by 31 March 2025. The sector faces significant understaffing (seven of 12 PSBs saw a decline in staff), with over 32,000 vacancies and reliance on over 101,000 contract workers.
Bank unions have been protesting that staff shortage is leading to deteriorating customer service and immense pressure on current staff. “When they can make do with contract staff and are doing away with regular employees, why should they bother about the retirees? The bank managements are now freeing themselves of all employees’ post-retirement incumbrances,” says a bank union leader. Thus, all eyes are on the Supreme Court.