AIBOC CIRCULAR NO. 133 ON SIMPLIFICATION OF TAX LAWS

AIBOC issued its circular No. 133 on simplification of tax laws. We are reproducing the same here for our readers.

CIRCULAR NO: 133                           25^th SEPTEMBER, 2010

TO ALL AFFILIATES/MEMBERS:

SIMPLIFICATION OF TAX LAWS

One of the issues taken up by the Confederation with the Government of India is simplification of tax laws.  We have today sent a communication to the Hon’ble Finance Minister, Government of India, with our suggestions on the Direct Tax Code Bill pending before the Parliament for approval, a copy of which is appended for your information.

With greetings,

Sd/-

(G.D. NADAF)

GENERAL SECRETARY

No. 1454/309/10                             Date: 24.09.2010

The Hon’ble Finance Minister

Government of India

Parliament Street

New Delhi

Respected Sir,

DIRECT TAX CODE

It is a matter of great pleasure that you have been kind enough to have proposed the retention of certain existing provisions of IT Act pertaining to the individual tax payers in the Direct Tax Bill introduced in the Parliament. It is also appreciable that some improvements in slabs, removal of surcharge and cess, have been made. We are submitting following few suggestions in respect of personal taxation, especially salaried class, for your kind consideration.

Slab Rates:

The earlier provision in DTC for  personal income tax slabs may be retained as

Upto Rs.10 lacs	10%
Above Rs.10 lacs to Rs.25 lacs	20%
Above Rs.25 lacs	30%

Depreciation:

Out of the various categories of individual tax payers, only salaried tax payer are not eligible to claim the deduction of depreciation on the assets owned by them. Therefore, to give equal treatment to salaried class, the deduction towards depreciation of assets should allowed for them also.

Investment Avenues:

The followings additional items should be allowed to be considered for eligible investments for deductions under 80 (C)

Ø      Housing loan repayment (principal) amount

Ø      Mutual fund investments in tax saving schemes

Ø      Deposit with Banks having maturity period of minimum 3 years.

Leave Encashment:

The entire amount of leave encashment on superannuation be exempted from tax, without any limit.

Leave Travel Concessions:

Since, Leave Travel Concession is for rest and recuperation which will rejuvenate the employees to contribute their maximum to their performance and   as no pecuniary benefits are derived out of the LTC by the employee, we suggest to exempt encashment of LTC benefit from payment of tax.

Similarly, leave encashment availed by the employees at the time of availing LTC should also be exempted from payment of Income Tax.

House property income:

In view of escalating cost of repairs and maintenance of the house property, 40% of gross rent should be available for deductions from taxable income towards repairs and maintenance instead of reducing the percentage to 20%

Deduction should also be allowed from the gross rental income towards the amount paid for brokerage to the broker for arranging a tenant.

Deduction under 80GG for the house rent:

The ceilings of Rs. 2000/- p.m. should be enhanced to Rs. 25,000/- p.m. because the existing ceilings were decided decades back.

Deductions for News papers, books etc:

Deductions should be introduced for the amount spent by the employees towards the purchase of news paper, books, periodicals etc as the same are used for the updating the knowledge.

Standard deduction:

Till few years back the employees were eligible for Standard deduction upto certain ceilings from taxable income. This was unjustifiably discontinued. The employees are not eligible for deductions available to professional and business community. Therefore, the standard deduction be re-introduced.

Income tax rebate:

Deduction under 80 (C) be continued to be with the option to investor. Total deductions in this section be made upto Rs. 5, 00,000/- p.a.

Ø      Life insurance policies upto Rs. 1,00,000/-

Ø      PPF upto Rs. 1,00,000/-

Ø      Other investment for the balance amount

Mediclaim insurance premium upto Rs. 25,000/- to be allowed as separate deduction from taxable income as is being permitted presently.

Fringe benefit tax

Tax on perquisites and fringe benefits has caused a great burden to the officers in the Banking Industry. Therefore, tax on fringe benefits /perquisite be borne by the employer.

Similarly tax on value of free or concessional medical treatment, medical expenses reimbursement being welfare and social security measurers, tax on the same should be withdrawn.

We shall be highly obliged, if the aforesaid suggestions on personal tax structure are considered favourably by your good selves while passing the Direct Tax Bill.

With greetings

Yours faithfully

Sd/-

(G.D. NADAF)

GENERAL SECRETARY

AIBOC CIRCULAR NO. 132 DATED 23RD SEPTEMBER 2010

AIBOC issued its circular No. 132 on its 97^th programme of nature and also the workshop on 2^nd option of pension. We are reproducing the same here for our readers.

CIRCULAR NO:132                                  23^rd SEPTEMBER, 2010

TO ALL AFFILIATES/MEMBERS:

97^TH PROGRAMME OF NATURE CONCLUDED WORKSHOP ON 2^ND OPTION – FIXATION OF PENSION, COMMUTATION, FAMILY PENSION ETC., ON 20^TH AND 21^ST SEPTEMBER 2010, A GRAND SUCCESS

             

The success of a settlement is in ensuring its reach to the beneficiaries in good time.  The 2^nd Option on Pension Scheme agreement reached between the AIBOC and IBA is such an important agreement ensuring the benefit of the Pension to over 3 lac serving and 60,000 retired members of the banking fraternity.  Hence, the Confederation being a responsible and single largest union of the managerial cadre has a role in ensuring its perfect implementation all over the country.  It is in this background, the Confederation decided to conduct a 2 days’ workshop on the programme for the benefit of the members of the affiliates all over the country. The NATURE was entrusted with this responsibility.  As the time is the most important factor in the current settlement it was decided to hold the programme at the earliest possible opportunity.  The 20^th and 21^st September 2010 were the dates fixed for the purpose.

We were overwhelmed with the support and the encouragement received from our affiliates even with such a short notice that more than 30 people from different parts of the country responded immediately and the affiliates conveyed their desire to depute some more representatives for the programme but for want of sufficient notice they could not send them and hence the next programme should be conducted by NATURE to enable them, to send in few more nominations.

The two days programme commenced with a inaugural address by Com.G.D.Nadaf, General Secretary of AIBOC and also the main signatory to the 2^nd Option on Pension on behalf of the Confederation, who utilized the occasion to explain the knitty gritty of the negotiations and the efforts put in by the leadership of the Confederation in clinching the settlement which was resulting in prolonged delay.  He also gave the various facets of the negotiations and the provisions where the settlement ultimately brought solace to a large number of serving people as well as retired who were the most unfortunate to have missed the bus when the Pension Scheme was introduced.

The faculty was consisting of Com.Shantha Raju, former General Secretary of AIBOC, Com.K.B.Ballur, former President of Canara Bank Officers Association, Com.K.F.Mamadapur, Secretary of the AISBOF, Com.K. Nagaraja Shastry, Secretary of the AISBOF, and also Com.B.S.Prabhu. Manager, PGP Department, State Bank of Mysore. The workshop covered the various aspects of the Pension Regulations, the methodology of fixation of Pension, Family Pension, Commutation etc. The workshop also extensively covered the historical background of the Pension Scheme, the struggles that have gone into ensuring the settlement of Pension and its benefit to all the members despite several challenges, which we had to confront.

Com.G.Shivaram Alva, Chairman, All India Vijaya Bank Officers’ Association was the Chief Guest for the valedictory function.  He appreciated the efforts of NATURE in conducting this unique programme for the benefit of the members of the affiliates of the Confederation and complimented the leadership of the AISBOF for having developed a wonderful infrastructure for training and imparting knowledge to our members.  He wished that the subject being very comprehensive, the need is such that we should ensure that the benefit of the 2^nd Option is implemented in all the banks in good time and all the eligible members are able to get the benefit as per our agreement. He wished all the participants all success in their efforts in helping their members who are due for 2^nd Option as well as those retired members and family members.

Com.G. Shivaram Alva the Chief Guest also distributed the Certificates to all the participants. Com.K.F.Mamadapur, Secretary, AISBOF compeered the programme. On behalf of the participants, a number of members spoke highly about the programme and suggested for the conduct of similar programmes for the benefit of other members.  Com.Y.S.Kumar, Treasurer.  All India Central Bank of India Officers Federation proposed a vote of thanks on behalf of the participants.

Comrades, the success of this programme has encouraged the members of the faculty in NATURE and looking at the response we have been receiving, we propose to hold the next programme during October 2010. Further details will be circularised in due course.

With greetings,

Sd/-

(G.D. NADAF)

GENERAL SECRETARY

AIBOC CIRCULAR NO. 131 DATED 21ST SEPTEMBER 2010

AIBOC issued its circular No. 131 on Fitment of Pay on promotion from Clerical Scale to JMG Scale-I. We are reproducing the same here for our readers.

CIRCULAR NO:131                             21^st SEPTEMBER, 2010

TO ALL AFFILIATES/MEMBERS:

FITMENT OF PAY - PROMOTION FROM CLERICAL SCALE TO JMG SCALE-I

The fitment formula has to be revised after salary revision to protect the emolument of officer on promotion from clerical to officer cadre and also promotion within the cadre.  We have today sent a letter to the IBA, to evolve a suitable formula to ensure reasonable increase in pay package on promotion.  A copy of the communication is enclosed.

We shall advise the outcome later.

With greetings,

Sd/-

(G.D. NADAF)

GENERAL SECRETARY

No./1452/322/10                                                           21.09.2010

To,

The Chairman,

The Indian Banks’ Association,

World Trade Centre Complex,

Centre 1, 6^th Floor, Cuffe Parade,

MUMBAI – 400 005.

Dear Sir,

FITMENT OF PAY - PROMOTION FROM CLERICAL SCALE TO JMG SCALE-I

The 9^th Bipartite wage settlement was concluded on the 27^th April 2010 and the arrears have been paid to all the employees and officers in all the Banks.  As hitherto, immediately after the wage revision exercise, the Fitment Formula for the Promotee Officers had to be reviewed and revised with effect from 1^st November 2007.

It is quite but natural that every one expects an impressive increase in their pay packet on promotion from one grade to another.  However at present, contrary to the natural phenomenon, the emoluments get reduced when a clerical employee is promoted to officer grade in JMG Scale-I.  This is mainly because; the clerical employees get one or the other special allowance which will be higher than the normal differential that is maintained for a promotee officers in terms of the extant Fitment formula.  Further the entire exercise of fitment for employee (clerical) promoted to Officer grade has been at best is to protect their clerical emoluments to the extent possible on promotion.  It is our considered view that we have to now be more progressive to ensure, by way of the proposed fitment formula that not only the clerical emoluments should be protected on promotion but at least the promotee officer should get one additional increment or Special Pay equal to the last drawn increment which should qualify for all the benefits which a pay qualifies.

In view of the above, we shall be glad if you will issue guidelines to all Member Banks advising them to devise a Fitment Formula ensuring that the minimum differential on promotion for clerical employees to Officers Scale, should be equal to or higher than the highest special allowance a clerical employee is eligible in their respective Banks, besides one additional increment or Special Pay as stated above.

We request you to treat the matter as most urgent as the clerical employees promoted to officers grade on or after 1^st November 2007 are drawing less salary than what they were drawing / would have drawn had they not been promoted.

Thanking you,

Yours faithfully,

Sd/-

(G.D. NADAF)

GENERAL SECRETARY

PUBLIC SECTOR BANKS STEP UP FINANCIAL INCLUSION DRIVE

While the Government has asked them to provide basic banking services to all unbanked villages with a population of over 2,000 by March 2012, the banks are gearing up to cover even villages with population of between 1,000 and 2,000.

This was indicated by top public sector bankers at a meeting held to review the progress made by banks in achieving the financial inclusion action plan for 2010-2012 at the Indian Banks' Association on Thursday.

Since banks are investing in creating financial inclusion infrastructure involving technology and manpower, including banking correspondents, it was felt that this infrastructure should be leveraged to also cover villages with a population of between 1,000 and 2,000 if they happen to be close to villages with population of over 2,000, said Mr K. Unnikrishnan, Deputy Chief Executive, Indian Banks' Association.

Over 73,000 unbanked villages in the country have been allotted to different commercial banks for coverage through the banks' financial inclusion plans.

Rural hinterland

Banks propose to reach services to these villages by either opening branches or through Business Correspondents (BCs) and technologies that facilitate branchless banking at doorstep in the rural hinterland.

At the meeting, action taken by the banks on matters relating to financial inclusion, including the strategy adopted for enrolling and training the BCs, training the rural branch managers, technology plans, publicity awareness generation plans (so that people are aware about the various products and services being offered) and suitable monitoring mechanism for these efforts were discussed.

Meeting held

The meeting was chaired by Mr Rakesh Singh, Additional Secretary, Department of Financial Services, and attended by the chiefs and senior executives of State Bank of India, Bank of Baroda, Bank of India, Bank of Maharashtra, Central Bank of India, Dena Bank, IDBI Bank and Union Bank of India.

The financial inclusion plans will be dove-tailed with the Unique Identification project and the bank accounts will also be used to deliver various government social benefit schemes such as the National Rural Employment Guarantee Scheme, old-age pensions, and other direct subsidy schemes.

Source: http://www.thehindubusinessline.com/2010/09/24/stories/2010092451760600.htm

BANKS NEED RS 6-LAKH-CR CAPITAL TO MEET BASEL III NORMS: ICRA

Indian banks in the public and private sector will need to raise Rs 6 lakh crore in external capital over the next nine years, to comply with the proposed Basel III guidelines on capital adequacy levels, according to credit rating agency ICRA.

The agency cautioned that the higher level of core capital projected by the guidelines could dilute the return on equity for banks, besides lowering their leveraging capacity.

Nevertheless, Indian banks may still find it easier to make the transition to a stricter capital requirement regime than some of their international counterparts, since the regulatory norms on capital adequacy in India are already more stringent.

Also, most Indian banks have historically maintained their core and overall capital well in excess of the regulatory minimum.

Basel III guidelines

The proposed Basel III guidelines seek to improve the ability of banks to withstand periods of economic and financial stress by prescribing more stringent capital and liquidity requirements for them.

“It is the public sector banks that would require most the capital, given that they dominate the Indian banking sector,” said ICRA in a report.

Positive move

The capital requirement as suggested by Basel III is a positive move for banks as it raises the minimum core capital stipulation, introduces counter-cyclical measures, and enhances banks' ability to conserve core capital in the event of stress through a capital conservation buffer, according to the agency.

As for the liquidity requirement, the agency said, the liquidity coverage ratio under the proposed Basel III guidelines does not allow for any mismatches.

Comparable current regulatory norms prescribed by the Reserve Bank of India, on the other hand, permit some mismatches, within the outer limit of 28 days.

No significant issues

However, there are unlikely to be any significant issues for the Indian banks to adapt to these as and when they become applicable.

The prescribed liquidity requirements are aimed at bringing in uniformity in the liquidity standards followed by banks globally.

This requirement would help banks better manage pressures on liquidity in a stress scenario.

Source: http://www.thehindubusinessline.com/2010/09/24/stories/2010092451750600.htm

BOB STAFF LEAST PRODUCTIVE; CORP BANK BEST AMONG PSUS: RBI

Bank of Baroda ranks the lowest in employee productivity among public sector banks, although the bank spends more than the industry average on employees, according to a Reserve Bank of India (RBI) report.

According to the RBI data on Profile of Banks for 2009-10, profit per employee of Bank of Baroda (BoB) stood at Rs 8,000, much below the industry average of Rs 6.05 lakh in the last fiscal.

Whereas, wages as a percentage of the total expenses of Bank of Baroda is 16.14 per cent against the banking industry average of 14.83 per cent.

Other public sector lenders that are ranked low in the net earnings per employee parameter are Indian Overseas Bank, Syndicate Bank, Bank of Maharashtra and Central Bank of India.

The profit per employee of public sector banks on an average stood at Rs 5.34 lakh in 2009-10.

Corporation Bank's employees productivity is the highest among nationalised banks. The bank's profit per employee was Rs 9.52 lakh in 2009-10, followed by IDBI Bank at Rs 8.44 lakh. State Bank of India employees earned a profit of Rs 4.46 lakh each for their bank.

Private banks have fared well in this category, with the profit per employee of Axis Bank and ICICI Bank high at Rs 12 lakh each in the last fiscal. The profit generated by each employee of private sector bank stood at Rs 7.19 lakh in 2009-10.

Foreign banks, which are regulated by RBI, are way ahead when it comes to employee productivity. The profit per employee of these banks stood at Rs 17.09 lakh last fiscal.

Source: http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/BoB-staff-least-productive-Corp-Bank-best-among-PSUs-RBI/articleshow/6614530.cms

CENTRAL BANK OF INDIA BAGGED SKOCH AWARD 2010

Central Bank of India has been awarded SKOCH AWARD 2010 for its contribution in implementation of “e-Shakti” – a Project launched by Government of Bihar. Shri S Sridhar, Chairman & Managing Director, Central Bank of India alongwith Shri B N S Ratnakar, General Manager, Delhi Zone has received the award in a function organized at Delhi on 22/09/2010.

Source: https://www.centralbankofindia.co.in/upload/news/Press_Editors_SKOCH23092010.pdf

RBI ASKS BANKS TO BEEF UP DEPOSITS

Worried over banks’ reluctance to increase deposit rates despite its signal, the Reserve Bank of India (RBI) has prodded banks to beef up efforts to mobilise deposits.

At a recent meeting with the country’s top bankers, RBI officials, led by Deputy Governor Subir Gokarn, expressed concern over the tardy growth of term deposits.

Deposit growth has been just 14.44 per cent for the year to August 27, far below RBI’s projection of 18 per cent. This is mainly due to unattractive rates. With inflation close to double digits, the real returns are negative.

Though RBI raised repo and reverse repo rates by 25 and 50 basis points (bps), respectively, on September 16, most banks are yet to take its cue. A day after, the country’s largest lender, SBI, said it was not likely to raise rates before three-six months. “I am not seeing the possibility of any immediate change in interest rates,” SBI Chairman O P Bhatt had said in Indore.

According to bankers, the regulator wants that availability of money should not be a constraint to corporate India’s growth.

Banks, on the other hand, do not see an immediate need to raise rates as demand for loans has not picked up significantly. Bank credit growth till now has been in line with RBI’s projection of 20 per cent for 2010-11.

Rather than raising retail term deposit rates, which are more stable, banks are rushing to raise short-term funds. Yesterday, State Bank of India and some other banks raised around Rs 9,000 crore via the certificates of deposit (CD) route, of which over Rs 5,000 crore was through three-month CDs. Interest rates for three-month CDs were between 7.04 per cent and 7.19 per cent.

SBI offers 6.75 per cent on deposits with tenures of one-two years, but for 555 days it offers 7.25 per cent. For two-three years, the rate is seven per cent. For a 1,000-day deposit, it is offering 25 bps more.

In order to enhance the effectiveness of monetary policy, RBI forced banks to shift to a new loan pricing regime, known as the base rate, which replaced the erstwhile benchmark prime lending rate mechanism from July 1. According to RBI, though the transmission mechanism has improved, it is not robust.

“The transmission from policy rates to market rates has strengthened, with 40 banks raising deposit rates and 26 raising lending rates. These circumstances are expected to prevail, maintaining the repo rate as the effective policy rate and sustaining the strength of the transmission mechanism,” RBI had said in its mid-quarter review of monetary policy.

Source: http://www.business-standard.com/india/news/rbi-asks-banks-to-beefdeposits/408855/

DEPOSITS SHOW MODEST GROWTH...

High deposit rates are attracting more customers but deposit mobilisation is still not a strong footing, according to data released by the Reserve Bank of India (RBI). During the fortnight ended September 10, deposits mobilised by banks went up by Rs 20,465 crore, against an increase of around Rs 38,658 crore in the previous fortnight.

According to the data, deposits went up by 14.78 per cent on a year-on-year basis. After RBI asked banks to beef up deposit mobilisation in its first quarter monetary policy review, banks started raising rates. Most banks raised short- and medium-term fixed deposits by up to 150 basis points.

RBI increased the repo rate and reverse repo rate by 25 and 50 basis points to six per cent and five per cent, respectively, in its mid-quarter policy review released last week. However, very few banks have raised deposit rates in response to the latest rise in rates by the central bank.
 

SLOW AND STEADY
Fortnight-ended	Credit flow (Rs cr)	Y-o-Y  growth (%)*	Deposit  mobilised  (Rs cr.)	Y-o-Y growth (%)*
9-Apr	826	17.00	43501	16.00
23-Apr	-26483	17.13	-23328	14.97
7-May	13030	17.25	24471	14.72
21-May	2406	18.04	-4997	14.16
4-Jun	57895	19.12	-9024	14.33
18-Jun	22343	19.59	-23761	13.92
2-Jul	91973	21.70	1,15,162	14.92
17-Jul	-38913	21.27	-40867	14.55
31-Jul	-6211	19.67	47759	13.98
13-Aug	7245	20.13	-8016	14.10
27-Aug	-13114	19.40	38658	14.44
10-Sep	31532	19.76	20465	14.78
* At the end of fortnight                                             Source: RBI

RBI has projected 18 per cent deposit growth for 2010-11. So far, deposit growth has not exceeded 15 per cent in this financial year. Bank credit increased by a larger quantum than deposits, rising by Rs 31,531 crore during the fortnight. It grew by 19.76 per cent on a year-on-year basis at the end of the fortnight. Outstanding bank credit stood at Rs 33,82,927 crore, against Rs 33,51,396 crore at the end of the previous fortnight.

Bankers said they expected modest credit demand in the current quarter. The demand was robust during the first quarter of the financial year, predominantly because of the huge demand from telecom companies for 3G and broadband wireless access.

Last month, yields on CPs had touched a one-year high. This was also because of the banking system shifting to base rates as corporates had no means to raise short-term capital.

The central bank has projected 20 per cent growth in credit for the current financial year.

A number of banks have also increased their benchmark prime lending rates (BPLR) in a bid to coax more customers to move to the base rate system, which came into effect from July 1. So far, base rates have been untouched.

Source: http://www.business-standard.com/india/news/deposits-show-modest-growth/408853/