On 28 July 2006, hundreds of Reserve Bank of India (RBI) officers and employees staged a massive demonstration by marching to the Parliament seeking immediate intervention of the Parliament to restrain the RBI management and save the premier institution. Besides representation from all offices of the RBI, prominent members of Parliament, cutting across political affiliation, addressed the gathering of RBI staff, extending full support to the movement on this issue of national importance.

The protestors, under the banner of United Forum, made it clear that even after the protest march, if the concerned authorities do not come forward and sort out the issues amicably, Reserve Bank officers and employees will be constrained to go for a day’s token strike. They unanimously appealed to the management and the government to see reason and take initiative in the interest of the national economy and the people to defuse the situation before it is too late and save the RBI from prolonged industrial unrest.

The RBI officers and employees had two demands: (a) the restoration of the updated pension scheme; and (b) the revocation of the decision to outsource the clearing of cheques to private agencies.

Due to the persistent demand by the four recognised associations/federations of the employees of the Bank, the RBI management had introduced an updated pension scheme with effect from 1 November 1997. But the Ministry of Finance had asked the management to withdraw the scheme and to recover the amount already paid to the retirees. The protesting employees pointed out that the Ministry, which had provided the benefits for its staff, did not have right to withdraw the updated pension scheme. They criticised the stubborn attitude of the Finance ministry for obstructing legitimate superannuation benefits to the RBI staff. As for the family pension and commutation amount, the RBI employees` entitlement is at a much lower level than what is enjoyed by their counterparts in the central government.

The RBI management recently took a decision to give the job of clearing cheques to a private limited company called ‘National Payments Corporation of India’. Cheque clearance is undertaken in clearing houses, run and supervised by the RBI, the SBI and other public sector banks. Every day, around 5 million cheques worth Rs 40,000 crores are processed in the clearing centres. A major share is being handled by the RBI in the clearing houses run by it, mostly in the metropolitan cities. Cheque clearing provides an earning of approximately Rs. 1 crore per day by way of service charge to the RBI and other public sector banks. A survey conducted by the RBI itself on the clearing houses in Mumbai admits 97 per cent customer satisfaction. The clearing system, as it is in our country, can be compared with the best international standard. According to the protestors, cheque clearance being a very sensitive area of economic activity, handing over this job to a private concern without transparency and expertise is fraught with serious implications.

Giving the clearing of cheques from the RBI to a private agency is not just an instance of transferring jobs from the RBI to other agency. In the context of policy reforms, the entire role and function of the RBI is being redefined. According to the demonstrators, this may lead to outsourcing of more and more core functions of RBI.

For a healthy and sound banking and financial system, it is imperative that the RBI undertake regular, on-site inspection of banks and financial companies. Instead, off-site inspection by external audit agencies is given preference to on-site inspection by RBI’s own inspection team. The framing of policy and guidelines on the basis of data furnished by external agencies is bound to be faulty and risky.

All categories of RBI employees under the banner of United Forum of Reserve Bank Officers & Employees have raised their voice of protest against the unwarranted interference of the government in this matter and the RBI pension updation scheme. During the month of May and June 2006, a series of demonstrations have been held in all the offices of the Banks, with massive participation of the officers and employees. Since no response has come from the management, United Forum has decided to intensify the agitation.