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Spell out MoU terms for capital infusion: AIBEA to banks

The All India Bank Employees' Association (AIBEA) will decide on signing the tripartite MoU with the government and bank management…

Spell out MoU terms for capital infusion: AIBEA to banks

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The All India Bank Employees' Association (AIBEA) will decide on signing the tripartite MoU with the government and bank management after knowing its contents, a top leader said on Saturday.

Contrary to its earlier stand of infusing fresh capital in strong banks, the central government has decided to infuse fresh capital totalling Rs.8,586 crore into 10 weak banks subject to commitment to quarterly milestones by bank boards, management, employees and unions.

The government has said the SBI Caps will draw a bank wise action plan based on which a tripartite agreement between the government, bank management and employee unions will be signed committing themselves towards certain milestones.

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"We are not averse to sign the MoU (memorandum of understanding). But we should know the provisions of MoU before committing ourselves," C.H. Venkatachalam, General Secretary, AIBEA, said.

"SBI Caps have not given any detail about the bank wise action plan. Some banks managements want the unions to agree. But agree to what is not spelt out," Venkatachalam added.

He said way back in 2002 when Indian Bank was in serious financial trouble, the union had signed an agreement to forgo some of the employee benefits-like leave travel allowance, overtime allowance and others.

The Indian Bank management had agreed that top officials will not use air travel, officers would not claim travelling allowance and such things, Venkatachalam added.

"Now there is no information as to the contents of the proposed MoU," he said.

The central government in a letter to the 10 bank heads had listed out five parameters under which the milestones would be fixed for capital infusion.

These are: (a) active management of non-performing assets (NPA), strengthening of lending and monitoring processes; (b) arranging capital from the market; (c) plan for disposal of non-core assets; (d) divesting stakes in subsidiaries, closure of loss-making domestic and international branches; (e) reduction in operational expenses including employee benefits to would be reversed once the banks turns around.

Venkatachalam said: "Going by the past experience, the banks would turnaround and then start building up bad loans calling for another turnaround with sacrifices by the employees."

The amount of capital to be infused by the government are:

Allahabad Bank (Rs.418 crore), Andhra Bank (Rs.1,100 crore), Bank of India (Rs.1,500 crore), Bank of Maharashtra (Rs.300 crore), Central Bank of India (Rs.100 crore), Dena Bank (Rs.600 crore), IDBI Bank (Rs.1,900 crore), Indian Overseas Bank (Rs.1,100 crore), UCO Bank (Rs.1,150 crore), and United Bank of India (Rs.418 crore).

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