IBA sources said that the various bank employees' and officers' unions have asked for a mutual arbitration on the cost issue of the pension funds. "Both parties should agree to represent the matter to an external arbitrator," the sources added. "The IBA negotiation committee has, however, declined this offer and has decided to stick to the terms agreed in the MoU signed by IBA and the trade unions on March 11 which envisages a wage hike of 12.25 per cent for the bank employees over the March 31, 1997, salary figures," IBA secretary MN Dandekar told The Financial Express. Dandekar said that the 12.25 per cent wage hike incorporates the increasedpension costs on account of wage increase. "IBA maintains that both sides agreed at a 12.25 per cent hike inclusive of cost of superannuation benefits and all aspects of wages/allowances and additional costs by way of higher gratuity, PF contribution and pension," he added. Earlier, IBA chairman AT Pannir Selvam, told The Financial Express, "IBA's member banks are not willing for any further concessions and may pull out en masse from the negotiations in case we digress from the MoU signed by IBA and the trade unions on March 11. With their bottomlines under tremendous pressure on account of low credit offtake, lacklustre economy and increasing competition, banks are not in a position to offer any further increase in the already huge wage bill of around Rs 1,460 crore per annum." The main grudge of various employees' unions revolves around IBA's attempt to `stone-wall' the entire process of settlement by refusing to negotiate the issue of distribution of load and charging 26.5 per cent basic pay for thepension scheme which is in lieu of the PF, as against the 10 per cent PF employees were contributing earlier.

Senior IBA sources said that among the nine unions (AIBEA, NCBE, BEFI, INBEF, NOBW, AIBOC, AIBOA, INBC and NOBO), two unions, namely the Bank Employee Federation of India (BEFI) and the National Organisation of Bank Workers (NOBW) have not agreed with the suggestion of other unions for and external arbitration and prefer bipartite negotiations, a stand welcomed by the bankers' association.

Employees contribute 10 per cent of their basic salary towards the provident fund and pension fund and the bank contributes a similar amount. However, in last few years, banks have provided a sum of around Rs 9,600 crore towards formation of the pension fund corpus for the retired persons due to poor profitability and is now insisting that the employees should bridge the gap which is around 16.5 per cent. Chief executives and chairmen of the banks have reportedly told the union representatives today that ifthe forum could not provide a viable solution to the dispute, the IBA would send the MOU to individual bank management for taking a separate decision at the bank level on the load factor issue.