AIBOC CIRCULAR NO. 12 DATED 07.02.2011

AIBOC issued its circular No. 12 dated 07.02.2011 on suggestions made to Govt. of India on Central Budget 2011. We are reproducing the same here for our readers.

CIRCULAR NO. 12                                                                     07.02.2011

TO ALL AFFILIATES/MEMBERS:

CENTRAL BUDGET 2011 - OUR SUGGESTIONS

We have addressed a letter to Sri Pranab Kumar Mukherjee the Ho’ble Finance Minister , Government of India , where in we have made many suggestions for incorporating in the budgetary proposals for the year 2011-2012. The letter which is self explicit is annexed  and further developments in the matter will be informed .

With greetings,

Sd/-

(G.D. NADAF)

GENERAL SECRETARY

No.1410/97/11                                                            07.02.2011

To,

Sri. Pranab Kumar Mukherjee

Hon’ble Finance Minister,

Government of India,

South Block, Parliament House,

New Delhi.

Respected Sir,

CENTRAL BUDGET 2011- OUR SUGGESTIONS

You have been holding a Meeting of Central Trade Unions in India, as a part of the Pre-budget exercise, to consult them on various issues related to the preparation of the Budget for the ensuing financial year.  We have been taking up with the Ministry of Finance, Government of India, to extend invitation to us, for attending pre-budget consultations. We are an umbrella organisation, representing more than 90% of the entire officers working in the Banking Industry. But our demand has not been acceded to. We hope, we will be extended an invitation to attend such important meetings where we can make a presentation on various important issues affecting our economy and the common man.

We wish to submit the following for favour of your consideration and incorporation in the budget to be presented in the Parliament.

(i)                   Nationalisation of old generation Private Sector Banks; which have been functioning just like the Banks in the Public Sector as far as lending to the priority sector, the weaker sections of the society, financial inclusion etc.  are concerned. These Banks have been implementing the Govt. sponsored schemes such as MGNREG Scheme, poverty alleviation and employment generation programmes etc. with the same spirit as done by the Public Sector Banks.

Continuous efforts are being made to poach these banks by the new generation Private Sector Banks or Private industrial/business houses.  The old generation Private Sector Banks are swallowed by the above forces; despite organised resistance to such efforts.

We therefore urge upon you to Nationalise old generation Private Sector Banks or retain the present position of these Banks or merge them with the Public Sector Banks, in the interest of the general public, the investors and the employees of these Banks.

(ii)                 Stop, Merger / Acquisition of Public Sector Banks: The Public Sector Banks which control more than 90% of the Banking transactions, have been doing a yeomen service by effectively implementing the Government sponsored initiatives such as MGNREG Scheme, priority lending, poverty alleviation, employment generation programmes etc. The ambitious financial inclusion programme is being implemented by the Banking Industry in right earnestness.

Because of more than 90% of the Banking Industry in our country being in the Public Sector, the strict regulatory mechanism of RBI, our Banks survived the onslaught of the global recession triggered by the USA. The slogan of “Big is beautiful and size matters” has been shattered in the wake of the global recession, which swept away many giant banks in the USA, Europe and Japan.

In our country, each bank has its own distinct culture and client base in some geographical areas and these banks have been participating in the economic progress of the country in their own way. Merger of these banks with other Banks will not be in the interest of the nation and status-quo-should be maintained.

(iii)                Absorption of Tax on perquisites by the employer.

The officers working in the Banking Industry have been subjected to payment of tax on perquisites. The perquisites given to the officers under welfare measure, to take care of the well-being of the officers and their families.  But facilities such as leased accommodation, Encashment of Leave, Conveyance Allowance, Medical Expenses Reimbursement, Loans at concessational rate of interest which are brought within the ambit of perquisite tax, which has acted as a deterrent to officers to avail the facility.

It is also pertinent to note here that the officers/employees in the Banking Industry are made to pay tax on allowances such as HRA, CCA, DA etc., which have been kept out of the definition of “income” by judicial pronouncements but the Government has failed to respond to these judgements. The Government has nullified the effect of such pronouncements through legislation.

As a consequence, the Officers are compelled to pay heavy tax, reducing their real income. We request you to reduce, the burden of tax on the Officers, by not taxing the perquisite value or by shifting the burden to the employer.

(iv)                Initiate immediate steps to curb inflation and contain the increasing prices of essential commodities such as food grains cereals vegetables edible oils, kerosene, sugar, petrol, diesel, LPG etc. which have pushed the common man to a point of deprivation, impoverishment, leading to hunger.  This has led to very unpleasant situation and may lead to chaos and social unrest.

(v)                  Income Tax exemption ceiling for the salaried class should be raised to Rs.3.00 lacs, which will provide some relief in the context of erosion in the value of money on account of sky rocketing prices. The tax slabs be revised with 10% tax up to Rs.10/- lax taxable income.

(vi)                Bank Licensing policy:

It is reported that, the Govt. of India and Reserve Bank of India, are contemplating to grant licenses to Private Business Houses in the country for setting up Commercial Banks.  It is also reported that, such banks will be established with an Initial Capital of Rs. 1,000 crores.  This purported policy initiative of the Govt. is not in the best interests of the nation as the private business houses will be more concerned about making only profits and social banking will not be their concern. We have before us the attempts of the Govt. of India to grant licenses for establishment of local area banks and the proposal was dropped in the interest of the financial inclusion, Banks should be under the Public Sector only.  

(vii)               The moves of the Government to go for a massive disinvestment programme in the Public Sector Units, Banks should be stopped forthwith as the Public Sector Units played a crucial role during the year, which led to decline in private capital investment, in the wake of global financial crisis triggered by the economic recession. The Public Sector undertakings including Banks have weathered the crisis in the wake of global recession and continued to be in the pink of their health registering extraordinary performance and robust growth. Hence, the Public Sector Banks/Units need to be strengthened as well as expanded.  The disinvestment of stake of Central Govt. should be stopped forth with, in the national interest.

(viii)             Entry of MNCs and Big Corporates in Retail Trade should be prohibited, as this would destroy the small traders, retailers, who have been eking out a living out of their business. The removal of these small traders and retailers will lead to monopolistic tendencies among the MNCs and Big Corporates, which are against the national interest.

(ix)               Concrete and effective measures should be initiated expeditiously for recovery of Non-performing Assets in the Banking Industry from the business and Corporate Houses who have willfully defaulted.  Stringent steps should be initiated to book all the big, wealthy, willful defaulters.

(x)                 The Regional Rural Banks should be merged with the sponsor Banks.  This will help the sponsor banks to expand their reach in the rural side.

(xi)               There is a need to set-up National Co-operative Bank and strengthen the co-operative Banking sector.

The above suggestions are only illustrative and not exhaustive. We make a strong plea to you that the proposed budgetary proposals should be people oriented addressing the mammoth issues of poverty, unemployment, agrarian crisis, skyrocketing prices of essential commodities.

We have the confidence that our suggestions will receive your attention and the same are incorporated in the budgetary proposals for the ensuing financial year.

We also would request you to extend an invitation to us to participate in the post-budget consultations to be held with the Central Trade Unions, Corporates and Business Houses.

Thanking you,

Yours faithfully,

Sd/-

(G.D. NADAF)

GENERAL SECRETARY