State-run banks will take a strike of Rs 4,000 crore this financial year with the banking regulator directing these lenders to provide for the pension liabilities of their retired staffs in the balance sheet for ‘10-11. This is step is likely going to reflect on the profitability of the banks.
Banks have asked for the same to be distributed over a period of 5 years to reduce the immediate strain on the books. The regulator is specific about payment being in lump sum.
Among the government-run banks, Punjab National Bank, Central Bank of India, Bank of ,Baroda, Canara Bank and Bank of India have a huge employee base and initial estimates are that the pension liabilities for them could range between Rs 200 crore and Rs 300 crore. For some of the smaller banks such as Corporation Bank, Dena Bank and Andhra Bank, liabilities could be in the range of Rs 100-150 crore each. Such a hit will put pressure on the banks to increase their business in Home Loan and Personal loan.
SBI, the country’s largest bank, will not be impacted by this decision as it has been offering pension benefits to all its employees since its inception unlike other state-run banks.