Banks’ profits not just for salary hikes: Chidambaram

Tags: News

Employees of 27 PSU banks strike work; FM appeals for rethink

As employees in 27 PSU banks struck work to demand higher wages, finance minister P Chidambaram on Monday made a fresh appeal to them to recognise that bank profits are not meant only for increased salaries as they had other requirements too. “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,” Chidambaram said at an Indian Overseas Bank function.

Normal bank activity like cheque clearances and cash withdrawals were hit in PSU banks as both officers and other staff went on a two-day strike from Monday to press their demand. There are eight lakh employees in PSU banks spread over 50,000 branches in the country. Private sector banks Like ICICI Bank HDFC Bank and Axis Bank are functioning normally as their employees have not joint the strike.

“It cannot be that all profits are used to declare dividend and to provide enhanced wages and allowances to bank employee,” Chidambaram said adding some bank earnings would have to be retained for infusing additional capital to take care of the future requirements.

He said banks infused about Rs 35,000 crore from their retained earnings in 2011-12 and Rs 37,936 crore in 2012-13. The government too has infused Rs 12,000 crore capital in 2011-12 and Rs 12,517 crore in 2012-13. The government has allocated Rs 14,000 crore for capital infusion in this financial year. Chidambaram said Indian banks were Basel ll complaint but “we have to be compliant with Basel III norms. Every year until 2018 or so, Basel III norms will kick in and all our banks will have to be compliant with Basel III norms.

“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.

On mounting NPAs, Chidambaram said banks should not be lax in recovery especially from willful defaulters. NPAs of public sector banks rose 28.5 per cent to Rs. 2.36 lakh crore in September last year from Rs. 1.83 lakh crore in March 2013. Total NPAs had gone up to Rs. 1.37 lakh crore in March 2012 from Rs. 94,121 crore in March 2011. The amount of NPAs in September 2013 has more than doubled since March 2011.

krsudhaman@mydigitalfc.com

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