PSU Insurance Employees Reject Salary Hike Proposal given by DFS

 Workers at public sector insurance companies have turned down the government's request for a 12% pay increase. Rather, they have called for a pay raise of at least 17%. The Department of Financial Services' (DFS) proposed 12% pay increase has been rejected by unions that represent 35,000 workers in the public sector general insurance business. Instead, the unions are calling for a 17% pay raise to match that of the employees of the Indian banking industry and the Life Insurance Corporation (LIC).

The Reserve Bank of India (RBI) recently raised employee salaries. In March of last year, Public Sector Banks signed the 12th BPS. The DFS has agreed in principle to update the employee family pension, raising it to 30%, which is a favorable step that the unions have endorsed. The unions applauded this action as a positive stepping stone.

Details of the Wage Revision Meeting

The wage revision discussions were held in New Delhi. The meeting was attended by representatives from the management of the General Insurance Public Sector Association (GIPSA), which represents the six public sector general insurance companies. Also, representatives from all the recognized unions of the industry, were present in the meeting.

The six state-owned general re/insurance companies included in this discussion are:

• New India Assurance
• Oriental Insurance Company
• United India Insurance
• National Insurance Company
• Agriculture Insurance Company

The Unions’ Stance on the Wage Proposal

Initially, the GIPSA management proposed a 10% increase on the basic pay and dearness allowance (DA). However, this proposal was immediately rejected by the unions. After this rejection, the management raised the offer to 12%. Despite this, the unions stood firm on their demand for a 17% wage hike to ensure parity with LIC employees and those in the Indian banking sector.

According to sources from the unions, they have been clear in their stance that the offer is still insufficient. The unions continue to push for a higher increase in salary.

Next Steps and Future Discussions

In response to the unions’ demand, the GIPSA management has assured that the matter will be revisited and taken up with the Joint Secretary of the DFS for further discussion and consideration.

The meeting was attended by the CMDs, executive directors, and general managers of the participating companies, along with the Joint Secretary and Under Secretary from the DFS. More details will be released soon.

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The government's long-standing goal of privatizing Public Sector Banks might materialize in FY25.

According to industry insiders, the government's long-pending goal of privatizing some small public sector banks (PSBs) might make some headway in 2024–2025.

"In recent years, the IDBI (Bank) stake sale has taken place. It is possible that additional banks will be privatized this year. According to Chandan Sinha, a former executive director of the Reserve Bank of India, "it has been pending for a long time."

Currently, 12 state-owned banks in India hold around 60% of the total assets inside the banking sector. The process of the government selling its shares in these firms was postponed until the Lok Sabha elections of 2024, despite assurances to the contrary. Finance Minister Nirmala Sitharaman stated in Budget 2020 that the government plans to privatize at least two banks and one insurance company. However, this remained on paper. Industry analysts predict that, given the delay, the government may actively consider first privatizing a few of the smaller PSBs.

A senior PSB executive, who wished to remain anonymous, pointed out that the government has long been discussing privatization and that perhaps it will be given more thought. "The elections put a stop to the process." The government would soon reconsider privatizing some PSBs, the executive speculated.

Sitharaman stated that bank privatization will go according to plan during a May 29 event in Mumbai. As part of the disinvestment push to raise Rs 1.75 lakh crore, she had proposed the privatization of PSBs in 2022 when presenting the Budget 2021–2022.

Since then, the sale of around 61 percent of IDBI Bank has been underway between the Indian government and the Life Insurance Corporation of India (LIC). The Department of Investment and Public Asset Management (DIPAM) stated that it received multiple expressions of interest for the IDBI Bank stake that was up for bid in January 2023 after inviting bids from buyers in October 2022. In order to satisfy the fit and appropriate requirements, bidders must obtain two sets of approvals: one from the Reserve Bank of India (RBI) and one from the Home Ministry for security clearance. Although the sale of stakes in IDBI Bank is ongoing, there is a possibility that other PSBs could soon be privatized.

 

In a previous interview with Moneycontrol, economist Montek Singh Ahluwalia, the head of the former Planning Commission, explained the selection process for privatization, stating that the method will be applied to banks that aren't functioning properly. Ahluwalia stated, "Privatization seems to be limited to small PSBs that are not doing particularly well."

Explaining how banks are chosen for privatisation, Montek Singh Ahluwalia, economist and chairman of the erstwhile Planning Commission, in an earlier interaction with Moneycontrol said that banks that aren’t performing well will be chosen for the process. “Privatisation seems to be limited to small PSBs which are not doing particularly well,” Ahluwalia said.

Arvind Panagariya, the head of the 16th Finance Commission and a former vice chairman of NITI Aayog, the nation's top economic think tank, stated that the privatization of PSBs ought to be a priority for the incoming government during a March 2024 Business Today event. "The banks are doing well and growing right now; their value is unwavering. Now is a favorable moment to privatize. When the government returns in its next term, Panagariya has stated, "I think this is a good time to start seriously privatizing some of the public sector banks."

The Bank of Baroda, Bank of India, Bank of Maharashtra, Canara Bank, Central Bank of India, Indian Bank, Indian Overseas Bank, Punjab & Sind Bank, Punjab National Bank, State Bank of India, UCO Bank and Union Bank of India are the country's twelve public sector banks.

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NITI Aayog submits final list of PSU banks to be privatised

Government think tank Niti Aayog has submitted to the Core Group of Secretaries on Disinvestment the finalised names of PSU banks to be privatised in the current fiscal as part of the disinvestment process, a senior government official said.

Niti Aayog has been entrusted with the task of selection of names of two public sector banks and one general insurance company for the privatisation as announced in the Budget 2021-22.

"We have submitted the names (of PSU banks) to the Core Group of Secretaries on Disinvestment," the official said.

The other members of the high-level panel are economic affairs secretary, revenue secretary, expenditure secretary, corporate affairs secretary, legal affairs secretary, Department of Public Enterprises secretary, Department of Investment and Public Asset Management (DIPAM) secretary and administrative department secretary.

Following the clearance from the Core Group of Secretaries, headed by the Cabinet Secretary, the finalised names will go to Alternative Mechanism (AM) for its approval and eventually to the Cabinet headed by the Prime Minister for the final nod.

Changes on the regulatory side to facilitate privatisation would start after the Cabinet approval.

Finance Minister Nirmala Sitharaman had recently said "interests of workers of banks which are likely to be privatised will absolutely be protected whether their salaries or scale or pension all will be taken care of".

Explaining the rationale behind the privatisation, Sitharaman had said that banks in the country needed to be bigger, just like the State Bank of India (SBI).

"We need banks which are going to be able to scale up... We want banks that are going to be able to meet the aspirational needs of this country," Sitharaman had said, adding that a lot of thought had gone behind the intention to privatise some public sector banks.

The government has budgeted Rs 1.75 lakh crore from stake sale in public sector companies and financial institutions, including 2 PSU banks and one insurance company, during the current financial year. The amount is lower than the record budgeted Rs 2.10 lakh crore to be raised from CPSE disinvestment in the last fiscal.

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Bank, insurance unions threaten strike during Parliament’s winter session

The Co-ordination Committee of Bank, Insurance and Finance Sector Unions (CCBIFU) on Saturday said a would be called during the winter session of the Parliament if the government does not revise its policies on banking and insurance sectors.

“If the government does not revise its policies on banking and insurance sector and would continue with their existing policies, the CCBIFU will decide to go on a strike during the winter session of the Parliament in December, 2018,” Committee Chairman C.H. Venkatachalam said in a statement.
The Committee was formed to protest against what are termed as attacks on the banking and insurance sectors like foreign direct investment (FDI), disinvestment and other sectoral reforms.

The All India Bank Employees Association (AIBEA), All India Bank Officers Association (AIBOA), General Insurance Employees All India Association (GIEAIA) and All India LIC Employees Federation (AILICEF) constitute the commitee.
While Venkatachalam, the General Secretary of AIBEA, is the Committee’s Chairman, K. Govindan, General Secretary of the GIEAIA is the Convener.
According to Venkatachalam, banks represent hard earned savings of the common people.

“Today it is more than Rs 115 lakh crore. If banks are privatised, the people’s money will be in the hands of the capitalists. The only problem in the banks is the huge bad loans due from the corporate borrowers,” he said.
“Instead of taking action to recover the bad loans, banks are sought to be handed over to them. In LIC also there are huge bad investments which are non-performing. There must be a thorough parliamentary probe into all these investments,” he added.

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Govt. to merge three PSU insurance companies

Three public sector insurance companies—The Oriental Insurance Co. Ltd, National Insurance Co. Ltd, and United India Insurance Co. Ltd— will be merged into a single insurance company and listed on the bourses, finance minister Arun Jaitley announced in the Union Budget on Thursday.

The merging of the three state-run insurers will lead to the creation of a mammoth organization, and will be a key part of the government’s divestment target of Rs80,000 crore set for fiscal year 2018-19.

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