AIBEA/GS/2017/61 2-7-2017
To
Secretary,
Dept. of Financial Services,
Ministry of Finance,
Govt. of India, New Delhi.
Dear Madam,
Reg: Reported transfer of Rs. 2026 crores from Employees Pension Fund to Profit & Loss A/c as on 31-3-2017 in Punjab National Bank.
We are receiving anxious queries from bank employees and bank retirees about the reported transfer of an amount of Rs. 2026 from the PNB Employees Pension Fund to the Profit and Loss Account in the Balance Sheet of Punjab National Bank as on 31-3-2017 to enable the Bank to show some profit. On scrutiny of the Balance Sheet documents obtained from Bank’s website, we find the following observations in those statements:
Balance Sheet as on 31-3-2016: Item 6 under Notes:
“During the year, the Bank has changed the basis of valuation of plan assets from book value to fair value in accordance with AS15 issued by the ICAI. As a result of this change, the value of Plan assets has increased by Rs. 358.07 crores in respect of Pension Fund and by Rs. 53.08 crores in respect of Gratuity Fund.”
Item 5 of the Auditors’ Independent Report to the Board, it is mentioned as under:
“Without qualifying our opinion, we draw attention to Note 6 regarding change in valuation of Plan Assets of long term benefits from Book Value to Fair Value, resulting in increase in the value of Plan value Assets by Rs. 388.07 crores in respect of Pension Fund and by Rs. 53.08 crores in respect of Gratuity Fund.
Balance Sheet as on 31-3-2017: Clause 11 under Notes:
“In accordance with AS-15 issued by ICAI, during the current quarter while considering the fair value of plan assets relating to pension and gratuity fund being long term benefits of employees, interest accrued on investments has also been taken into account as against principal amount in earlier quarters/years. Consequent to this, employer contribution to pension and gratuity funds representing excess of fair value of plan assets over present value obligation amounting to Rs. 2026.60 crores has been credited to “Payments to and Provisions for Employee Cost” during the current quarter/year. “
Item 5 of the Auditors’ Independent Report to the Board, it is mentioned as under:
“Without qualifying our opinion, we draw attention to Note 6 regarding change in valuation of Plan Assets of long term benefits from Book Value to Fair Value, resulting in increase in the value of Plan value Assets by Rs. 388.07 crores in respect of Pension Fund and by Rs. 53.08 crores in respect of Gratuity Fund”.
The Statement also includes the following information:
Employee Cost Operating Profit Net Profit
Qr ended 31-03-2016 : Rs. 1007.57 cr 2620.87 cr - 5367.14 cr
Qr ended 31-12-2016 : Rs. 2102.13 cr 2780.93 cr 207.18 cr
Qr ended 31-03-2017 : - Rs. 548.36 cr 6231.79 cr 261.90 cr
Entire year 31-3-2016 : Rs. 6425.95 cr 11339.38 cr - 3974.39 cr
Entire year 31-3-2017 : Rs. 5420.72 cr 14565.16 cr 1324.80 cr
The above figures give us the information that the Employee cost has become negative in last Quarter of 2016-17 and the total Employee cost for the year has also come down. Obviously Employee cost cannot come down. If we link it up with the information from the Auditors Note that Rs. 2026 has been credited to Employee Cost due to excess value in Pension Fund, it gives the meaning that the amount has been taken from Pension Fund to Employee Cost account in P & L account. The External Auditors’ remark also adds to some apprehension.
Further, when the accounting procedure was changed as on 31-3-2016 itself from Book value to fair value, it is not understood why this was not adhered to in Q1, Q2 and Q3 of 2016-17 and why again implemented only in Q4.
All such related questions need to be answered and allegations need to be dispelled. Since Government has not appointed Workman Employee Director in the Banks and the post remains vacant for months together, we have no scope to know what happened exactly while finalising the Balance Sheet. However, Finance Ministry nominee Director is there in all Banks including PNB. Hence Government should be aware of the factual position. We shall thank you intervene and look into the matter urgently so that anxieties that Pension Trust Fund has been utilized to show an artificial profit of the Bank is properly clarified.
We are sure that this communication will understood in the correct perspective and addressed accordingly.
Thanking you,
Yours faithfully,
CIRCULAR LETTER No. 28/22/2017/23 4-7-2017
TO ALL OFFICE BEARERS/STATE FEDERATIONS/
ALL INDIA BANKWISE ORGANISATIONS / ALL UNITS
Dear Comrades,
Our struggle against increasing challenges in banking sector
All our units are aware that in the face of increasing challenges, attacks and offensives in the banking sector, particularly against public sector banks, we have been waging a relentless war through various campaign and struggle programmes.
Taking cognizance of these naked attacks on public sector banks, especially, the corporate loot going on in the name of huge bad loans and attempts to write them off, the National Council meeting of the Communist Party of India held recently adopted a Resolution on the emerging banking crisis. We furnish herein the text of the Resolution for the information of our units.
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