ALL INDIA STATE BANK OFFICERS FEDERATION

(Registered under the Trade Unions Act 1926, Registration No: 727/MDS)
State Bank Buildings, St. Marks Road, Bangalore 560 001
CIRCULAR NO.50 Date: 15.05.2014
ALL AFFILIATES/MEMBERS:

P.J.NAYAK COMMITTEE REPORT

Our members are aware that an RBI Committee headed by Mr.P.J.Nayak, released a draft
report on governance changes for PSU Banks and for revamping their ownership structure.
The Report of Dr.P.J.Nayak ought to be rejected outright. The Committee, appointed by
the RBI during January 2014 has come out with far reaching recommendations on the
functioning of the Bank, which hits at the root of the lofty intentions and purpose with
which the Indian Banking System was envisaged. The bitter memories of the Sub Prime
lending crisis and the financial crisis of Europe are still fresh in the minds of the people,
the economists and the Government. The conservative and balanced policies of the RBI
and the Public Sector Banks in India apart from the positive role played by the Indian trade
unions had saved the Indian Banking System from this financial Tsunami. The need of the
hour is to strengthen the Public Sector Banks with capital infusion through budgetary
sources, and not venture into misadventure as indicated by the Report under question.

1. The sum and substance of the report is nothing but a repetition of the Narasimhan
Committee 1 and 2 reports, which aimed at privatization of Banking Industry
through relinquishing of the ownership of the Government. The Committee has also
gone into the functioning of the Boards, the equity structure, performance of weak
Banks etc., and made recommendations which are detrimental to the interests of the
Nation.

2. The Committee has also suggested a timeframe for transferring the ownership of the
Government, reconstitution of the Boards under the Supervision of Bureau of Bank
Boards, which will ultimately takeover the regulatory functions of the RBI/Govt.

3. It is also suggested that the Government reduce its stake to less than 50% for the
purpose of deregulation of banking functions, and thereafter transfer all the
investments to the Bank Investment Company, an intermediary to be set up.
Privatization of Banks which are not performing to the satisfaction of Government
and merger of such Banks is another recommendation.

4. In order to ensure that the Government and RBI do not interfere in the day to day
functioning of the Boards, it is suggested to withdraw their nominees in the Bank
Boards.

5. The Committee has recommended setting up of three new authority structure for
managing the Banking Industry viz.,
a. Bank Investment Company (BIC)
b. Bureau of Bank Boards
c. Authorised Bank Investors

6. These Institutions will, in a phased manner, take control of the functioning of the
Banks.

7. Sweeping recommendations have been suggested in respect of HR policies which are
totally against the system of compensation, promotion policy, placement policy etc.
In the guise of providing level playing field they have suggested liberal compensation
to the executives, including giving stock options, commission on profits (including to
members of the Board) etc. Apart from bringing the Banking Sector outside the
purview of the public sector who are governed by the CBI/CVC as well as RTI Act,
etc., it is recommended that the equity of the Government is brought down to less
than 50% and also to annul the present Banks Nationalisation Act, 1969 and 1980,
SBI Act, SBI Subsidiaries Act and to bring the Banking Sector under jurisdiction of
Company Laws Act. The Committee also mischievously recommends allowing the
private operators to take over the old generation Private Sector Banks by terming
them as owned by certain communities or as controlled by few individuals as
promoters.

8. Further in order to encourage Private Players in the Banks, including foreign
operators, the committee has suggested, removal of all restrictions in the present
licensing policy and so as to allow MNCs entry into the lucrative Banking arena.

9. The All India State Bank Officers Federation, which is committed to protect interest
and resources of the Nation, is totally opposed to the outrageous report of
Dr.P.J.Nayak Committee, who himself headed Axis Bank, a Private Sector Bank. We
have urged upon the Confederation to not only campaign throughout the country but
also resort to agitation in case the Government goes ahead and accepts/implements
the report. All our affiliates/members may await for further details in the matter and
be prepared for any organizational action.

With greetings,



(Y.SUDARSHAN)
GENERAL SECRETARY