IBA - Dearness Allowance for Bank Staff and Officers from Nov 2018 to Jan 2019

DA for Bank Staff and Officers from Nov 2018 to Jan 2019

IBA Circular - Renewal Of Medical Insuranc Scheme

Renewal of Medical Insurance Scheme – IBA Circular dt. 10.10.2018

IBA Medical Insurance Scheme for Bank Retirees

IBA Medical Insurance Scheme for Bank Retirees

AISBOF - Discussions With IBA On Medical Insurance Scheme

Discussions with IBA on Medical Insurance Scheme

IBA Circular - Medical Insurance Scheme

IBA Circular - Medical Insurance Scheme

HR & INDUSTRIAL RELATIONS

No.HR&IR/SKK/Medical Ins/2018-19/5041

May 8,2018

Shri Sanjev K.Bandish,Convenor,UFBU

United Forum of Bank Unions,

C/o State Bank of India,LHO,Plot no.1, Sector -17A

Chandigarh – 1600017

Dear Sir,

Medical Insurance Scheme – constitution of committee

Please refer to our earlier communication in the subject matter and discussions held on 5th May,2018 with the Negotiating Committee. As desired , we place below the four suggested options:

i. Banks may go back to the earlier Hospitalization Expenses reimbursement Scheme as was in vogue till 9th Bi-partite settlement for employees and dependent family members.

ii.Directly deal with united India Insurance Co.Ltd or any other Insurance Company by calling quotes, without any interference from Broker.

iii.Advise banks to decide on the course of Medical Insurance Scheme on their own. Each Bank can negotiate with Insurance Companies to provide a Scheme tailor made to the requirement of the same.

iv.Continue with the process of appointing two or more brokers to help in assisting the IBA member banks to get a suitable Sheme prepared after getting the best quote as the nuances and fine print of the Insurance Policy and its features & interpretation will not be known to most employees & IBA in the absence of a broker.

2.In this context, as suggested by you, we would like to hold a meeting at our stadium House Office on 11.5.2018 at 11.00am to have fruitful deliberation for further course of action regarding Medical Insurance Scheme. You are therefore requested to kindly make it convenient to depute four representatives (two from officers Associations & two from Workmen Unions) to attend the meeting & share the views of the unions & Associations so that the matter may be concluded well in time before renewal.

3.A line of confirmation will be highly appreciated in this regard.

Yours faithfully,

S/d,

S K Kakkar,

senior Advisor (HR&IR)

IBA Circular - DA To Bank Employees For The Month Of May, June & July 2018

DA to Bank Staff from May 2018 – IBA Circular

HR & Industrial Relations

No.CIR/HR&IR/76/D/2018-19/4988

May 2, 2018

All Members of the Association

(Designated Officers)

Dear Sirs,

Dearness Allowance for Workmen and Officer Employees in banks for the months of May, June & July 2018 under X BPS/ Joint Note dated 25.5.2015

The confirmed All India Average Consumer Price Index Numbers for Industrial Workers (Base 1960=100) for the quarter ended March 2018 are as follows:-

January 2018 – 6573.86

February 2018 : 6551.03

March 2018 : 6551.03

The average CPI of the above is 6559 and accordingly the number of DA slabs are 529(6559-4440=2119/4= 529 Slabs). The last quarterly Payment of DA was at 527 Slabs. Hence there is an increase in DA slabs of 2, i.e 529 Slabs for payment of DA for the quarter May, Jun & July, 2018.

In terms of clause 7 of the 10th Bipartite Settlement dated 25.05.2015 and clause 3 of the Joint Note dated 25.05.2015, the rate of Dearness Allowance payable to workmen and officer employees for the months of May, June & July, 2018 shall be 52.90 % of ‘pay’. While arriving at dearness allowance payable, decimals from third place may please be ignored.

Yours faithfully,

sd/-

K S Chauhan

Advisor(HR&IR)

Orders Copy

Authority: www.iba.org.in

SC Judgement To Bank Employees

Anomaly in Computation of Pension – SC Judgement

Anomaly in computation of Pension Civil Appeal No. 5525 of 2012, Filed in the Hon`ble Supreme Court of India by Bank of Baroda & Ors with other Civil Appeals

HR & INDUSTRIAL RELATIONS

No.HR&IR/2018-19/G2/4786

April 3, 2018

Chief Executives of Member Banks which

are parties to the 7th Bipartite Settlement

Dear Sir,

Anomaly in computation of Pension Civil Appeal No. 5525 of 2012, Filed in the Hon’ble Supreme Court of India by Bank of Baroda & Ors with other Civil Appeals.

On 9-10-1993, a Bi-partite Settlement was signed at Industry level between Indian Banks’ Association (representing member Banks) and Workmen Unions (representing Workmen) under the provisions of Industrial Dispute Act, 1947 for introduction of Pension as a second retiral benefit in lieu of “Banks contribution to Provident fund.” On similar lines a Joint Note dated 29-10-1993 between Indian Banks’ Association (representing member Banks) and Officers Associations (representing Officers) was signed.

2. The respective member Banks in exercise of their power under Section 19 of Banking Companies (Acquisition & transfer of undertakings) Act, 1970/1980 pursuant to above referred Bi-partite Settlement/Joint Note, framed and notified in the Gazette of India “Bank Employees Pension Regulations, 1995.”

3. Another Joint Note/Bi-partite Settlement was signed between respective parties as mentioned herein above on 14-12-1999 and 27-3-2000 respectively relating to Wage revision. As per the provisions of said Joint Note / Bi-partite Settlement, 1684 points of Consumer Price Index (CPI) were merged with existing basic pay of Officers/employees and revised basic pay was worked out accordingly. However, as per agreed terms & conditions, pay for the purpose of pension was worked out after merging 1616 points of CPI as against 1684 points. These provisions were made effective w.e.f. 1-4-1998. As such, pay for the purpose of pension was less than the actual Pay the Employee/Officer concerned was getting on or after 1-4-1998. This anomaly was removed vide Joint Note/Bi-partite Settlement signed on 2-6-2005. However, monetary benefits were given w.e.f. 1-5-2005.

4. Due to this anomaly, the employees/Officers who retired after 1-4-1998, including those who retired under Special Voluntary Retirement Scheme, 2000 filed various Writ Petitions before different Hon’ble High Courts, praying that they be held entitled to Payment of Pension on the basis of actual average pay drawn by them during last 10 months as per the provisions of Bank Employees Pensions Regulations, 1995.

5. When the matter came up before Hon’ble High Court of Karnataka and Madras, the Hon’ble Courts decided the matter against Banks and ultimately concerned Banks approached Hon’ble Supreme Court by filing Civil Appeals viz., CA No 5525/2012, 6254/2012, 5611/2012, 3026-3253/2013, 3257-3262/2013, 11205-11340/2014, 11342-11435/2014, 9533-9646/2014, 8557/2014, 4711-4800/2014 and 1880/2018, 1881-1888/2018, 1890/2018, 1892-1912/2018, 1918/2018, 1919-2087 and 2088-2092/2018.

6. The Hon’ble Supreme Court vide its order dated 13/2/2018 (copy enclosed) have dismissed these appeals filed by the Banks and inter-alia has held that:-

“17…the provisions contained in Regulation 35 also make an incumbent entitled for opting the pension on the basis of average emoluments. The average emoluments have to be calculated on the basis of the preceding ten months. Adding Explanation (c) to Regulation 2(s), as done, could have created no fictional basis in view of clear and unambiguous provisions in other provisions of the Regulations. Besides, the definition of the average emoluments in Regulation 2(d) itself makes it clear that it is average pay drawn “during the last ten months” of his service by an employee. It cannot mean pay drawn by the employee even before several years. Mentionably there is no amendment made in the aforesaid provision of Regulation 2(d) and the expression during the preceding last ten months before date of retirement is clearly culled out in Regulation 38(1) and 38(2). Thus, in our considered opinion, the view taken by the then Chief Justice Vikramajit Sen as he then was, at Karnataka High Court and by the High Court of Madras are appropriate and the view taken by the Delhi High Court cannot be said to be sustainable for the various other reasons too mentioned hereinafter.

29. Thus, in our opinion, the Regulations which were in force till 2003, would apply with full force and as a matter of fact, the amendments made in it by addition of Explanation (c) in Regulation 2(s) did not have the effect of amending the Regulations relating to pension, as contained in Regulation 38 read with Regulations 2(d) and 35 of the Regulations of 1995. Even otherwise, if it had the effect of amending the pay and perks ‘average emoluments’, as specified in Regulation 2(d), it could not have operated retrospectively and taken away accrued rights. Otherwise also, it would have been arbitrary exercise of power. Besides, there was no binding statutory force of the so called Joint Note of the Officers’ Association, as admittedly, to Officers’ Association even the provisions of Industrial Disputes Act were not applicable and Joint note had no statutory support, and it was not open to forgo the benefits available under the Regulations to those officers who have retired from 1.4.1998 till December 1999 and thereafter, and to deprive them of the benefits of the Regulations. Thus, by the Joint Note that has been relied upon, no estoppel said to have been created. There is no estoppel as against the enforcement of statutory provisions. The Joint Note had no force of law and could not have been against the spirit of the statutory Regulations and the basic service conditions, as envisaged under the Regulations framed under the Act of 1970. They could not have been tinkered with in an arbitrary manner, as has been laid down by this Court in Central Inland Water Transport Corporation Limited & Anr. vs. Brojo Nath Ganguly & Anr., (1986) 3 SCC 156 & Delhi Transport Corporation vs D.T.C. Mazdoor Congress, (1991) Supp.1 SCC 600.

33. The only purpose of the addition of Explanation (c) to Regulation 2(s), was to take away the actual computation of the pension on the basis of the salary, which was drawn in the preceding ten months. Thus, we have to hesitation to strike it down being arbitrary and repugnant to other provisions/Regulations namely 2(d), 38(1)(2) and 35. The Explanation (c) to Regulation 2(s) is hereby struck down, as it could not have been enacted retrospectively to take away accrued rights. Even otherwise also it is held to be arbitrary and irrational. More so, in view of the fact that only by way of a temporary measure, that discrimination was created and the Explanation was deleted with effect from 1.5.2005.”

34. Thus, we set aside the judgment rendered by the High Court of Delhi and affirm that of High Courts of Karnataka at Bangalore and the High Court of Madras. The appeals filed by the Banks are dismissed and the appeal filed by the Association is allowed. Resultantly, let the amount which was due and payable be paid with 9% interest, be calculated and paid within four months from today.

35. All pending applications stand disposed of.”

7. The matter was put up to the Managing Committee of IBA in its meeting held on 28.3.2018. The committee resolved that the judgement of the Hon’ble Supreme Court may be forwarded to all member banks which are party to above mentioned Joint Note / Bipartite Settlement for their necessary action. As such, a copy of the judgement of Hon’ble Supreme Court is enclosed.

8. As directed by Managing Committee we have taken a Legal Opinion to know the impact of the judgement on various Banks which is given below:

(a) All Nationalized Banks who have Pension Regulations, 1995 will have to give effect to the judgement and pay the differential arrears in the amount of Pension which was due and payable with 9% interest within 4 months from the date of judgement i.e. 13.02.2018.

(b) Banks incorporated under special statutes will also have to give effect to the judgement if they have implemented provisions of the above mentioned Joint Note / 7th Bipartite Settlement.

(c) Private Banks which are not amenable to the Writ jurisdiction of the Hon’ble High Courts/Supreme Court, though can take the plea that captioned judgement is not applicable to them, should also give effect and comply with the captioned judgement if they have implemented provisions of the above mentioned Joint Note/7th Bipartite Settlement. The view expressed in this point Is based on the possibility that if the employees of the Private Banks approach the Civil Court on the basis of said Hon’ble Supreme Court judgement, they would procure a favourable verdict.

Yours faithfully,

B Raj Kumar

Deputy Chief Executive

Authority: http://www.iba.org.in/

SC JUDGEMNT

Corrigendum

IBA Circular - Anomaly In Computation Of Pension

Anomaly in computation of Pension – IBA Circular

Anomaly in computation of Pension Civil Appeal No. 5525 of 2012, Filed in the Hon’ble Supreme Court of India by Bank of Baroda & Ors with other Civil Appeals.HR & INDUSTRIAL RELATIONS

No.HR&IR/2018-19/G2/4829

April 6, 2018

Chief Executives of Member Banks which

Are parties to the 7th Bipartite Settlement

Dear Sir/Madam,

CORRIGENDUM

Anomaly in computation of Pension Civil Appeal No. 5525 of 2012, Filed in the Hon’ble Supreme Court of India by Bank of Baroda & Ors with other Civil Appeals.

Please refer to our circular No. HR&IR/2018-19/G2/4786 dated 3rd April 2018 on the captioned subject.

2. There is a typographical error in the date mentioned in para (I) of the above circular. Kindly read as under-

“ On 29-10-1993, a Bi-partite Settlement was signed at Industry level between India Banks’ Association (representing member Banks) and Workmen Unions (representing Workmen) under the provisions of Industrial Dispute Act, 1947 for introduction of Pension as a second retiral benefit in lieu of “Banks contribution to Provident fund”. On similar lines a Joint Note dated 29-10-1993 between Indian Banks’ Association (representing member Banks) and Officers Association (representing Officers) was signed”.

Inconvenience caused is regretted.

Yours faithfully,

B Raj Kumar

Deputy Chief Executive

View Circular

Authority: http://www.iba.org.in/

IBA - Second Option Of Pension For Compulsorily Retired Officers/ Employees

2nd Option of Pension for Compulsorily Retired Officers/Employees

Indian Banks’ Association

HR & INDUSTRIAL RELATIONS

No.HR&IR&HR/CIR/G2/BRK/4684

March 16, 2018

Chief Executives of Member Banks which

are parties to the Bipartite Settlement

Dear Sir/Madam,

2nd Option of Pension for Compulsorily Retired Officers/Employees

The United Forum of Bank Unions (UFBU) representing workmen and officers in Banks were requesting to allow another option to those Who were in the service Of the Banks prior to 29th September, 1995 in case of Nationalized Banks / 26th March, 1996 in case of Associate Banks of State Bank of India and continued in service on or after that date and did not opt for pension when offered as per the scheme.

2. After holding various rounds of discussions in the matter, consensus was arrived at between the parties and a Bipartite Settlement/Joint Note was signed on 27.4.2010 to extend another option of pension to those Workmen / Offcers who:-

(a) were in the service of the Bank prior to 29th September, 1995 in case of the Nationalised Banks/26th March, 1996 in case of Associate Banks of State Bank of India and continue in service of the Bank on the date of signing above mentioned Bipartite Settlement/Joint Note;

(b) exercise an option in writing within 60 days from the date of offer, to become a member of the Pension Fund and

(c) authorise the Trust of the Provident Fund of the Bank to transfer the entire contribution of the Bank along with interest accrued thereon to the credit of the Pension Fund. In addition, the individual employee/officer has to pay @ 2.8 times of the revised pay for the month of November 2007.

(d) were in service of the Bank prior to 29th September 1995 in case of Nationalised Banks /26th March 1996 in case of Associate Banks of State Bank of India and retired after date and prior to the date of above mentioned Bipartite Settlement/Joint Note i.e. 27.04.2010;

(e) exercise an option in writing within 60 days from the date or offer to become a member of the pension fund and,

(f) refund within 30 days after expiry of the said period Of 60 days, the entire amount Of the Bank’s contribution to the Provident Fund and interest accrued thereon received by the employee/officer on retirement together with the payment over and above the said amount at 56% of the amount.

3. Families of above mentioned employees officers were also made eligible for said option subject to refund of Bank’s contribution to the Provident Fund received by them as mentioned in point (f) above.

4. 2nd option of Pension was, however, not made available to the employees/officers who were compulsorily retired by the Bank. As such, some of these aggrieved employees/officers approached different Hon’ble High Courts seeking relief in the matter. Various Hon’ble High Courts viz Andhra, Madras, Madhya Pradesh, Punjab & Haryana and Patna have ruled in favour of the employees\officers who were compulsorily retired. However Hon’ble Delhi High Court has taken a contrary view on the technical ground.

5. The matter was placed before the Standing Committee on HR of IBA in its meeting held on 07.12.2017. Aner deliberations, the committee recommended to place the matter before the Managing Committee of IBA. Accordingly. the matter was put up to the Managing Committee of IBA in its meeting held on 29.12.2017. The committee advised to seek legal opinion on the judgements as to whether 2nd option of pension may be allowed to all ex-officers/ex-employees who were compulsorily retired from Bank’s service between 29.09.1995 to 27.04.2010 or only selectively to those who approached the Bank for the same.

6. The legal opinion from Shri S.D.Kelkar, Senior Partner, Kelkar & Associates whose services have been engaged in IBA as retainer, Was obtained in the matter, His opinion is as under:

“Having considered the decisions rendered by the Hon’ble High Courts of Andhra Pradesh, Madras, Madhya Pradesh, Punjab & Haryana, Patna which have ruled in favour of the employees/officers who were compulsorily retired way way of punishment/ on the ground that they are covered by the Joint Note as well as decision of the Hon’ble Delhi High Court which has laken a contrary view on the technical ground and the fact that SLPs preferred against the Jndgments of the High Courts which had ruled in favour of the employees were dismissed though such dismissal cannot be considered as law laid down by the SC., we are of the considered view the banks are bound to give 2nd option to all the employees/ officers who were compulsorily retired and who fall within the ambit of the Joint Note to exercise option for the following reasons:-

The Joint Note does not distinguish between voluntary retirement, superannuation, premature relirement, compulsory retirement.

Even the employees/ officers who are compulsorily retired by way of punishment are eligible for pension under the pension regulations.

Banks being “State” within the ambit of Article 12 of the Constitution of India should act in a fair and reasonable manner and should not restrict it only those who demand it. Such stand, if any, adopted by the banks may invite strictures from Courts’.

7. The views of the Legal Retainer of IBA were placed before the Managing Committee of IBA in its meeting held on 25.01.2018. The committee after deliberation concurred with the legal opinion placed before it and advised to inform all PSBs accordingly. The exact modus operandi of the extension of 2nd option to compulsorily retired employees/officers was to be worked out in discussions with GMs (HR) of PSBs to decide on a uniform methodology which will stand scrutiny of court.

8. To work out the methodology in this regard, a meeting of the GMs (HR) was convened on 28.02.2018 at IBA. After detailed discussions, a consensus has been arrived at to extend the option of pension to compulsorily retired employees/officers on same terms & conditions as are mentioned in Bipartite Settlement/Joint Note dated 27.04.2010, As per the agreed terms & conditions of said Bipartite Settlement/Joint Note, Pension/Family Pension shall be payable with effect from 27th November, 2009, provided that employees/officers who are compulsorily retired after that date shall get pension from the respective dates of such retirement. Court cases, if any, in the matter may be withdrawn forthwith.

9. Please do the needful accordingly.

Yours faithfully,

sd/-

B Raj Kumar

Deputy Chief Executive

Order Copy

Authority: http://www.iba.org.in/

IBA Circular - Wage Negotiating Committee Meeting With Unions / Associations

Wage Negotiation: Negotiating Committee Meeting with Unions/Associations

Indian Banks’ Association

HR & INDUSTRIAL RELATIONS

No.HR&IR/UFBU/XIBPS/4476

February 7,2018

Shri Sanjeev K.Bandlish
Convenor
United Forum of Bank Unions (UFBU) & General Secretary
National Confederation of Bank Employees
C/o State Bank of India, LHO
Plot No:1, Sector-17A
Chandigarh-160 017

Dear Sir,

Wage Negotiation: Negotiating Committee Meeting with Unions/Associations

It has been decided in consultation with the Chairman, Negotiating Committee of IBA, to hold next meeting of Negotiating Committee of IBA with the representatives of Constituent Workmen Unions/ Officers’ Associations of United Forum of Bank Unions (UFBU) on Wednesday, 21st February 2017 at 11:00 am in the Committee Room of IBA, World Trade Centre, Cuffe Parade, Mumbai.

2. You are, therefore, requested to please convey suitably to the General Secretaries of Constituent Workmen Unions/ Officers’ Associations of UFBU to make it convenient to attend the meeting by their authorized representative (s) as under:

Sr.No.	Name of the Unions/Association	No. of Representative (s)
1.	All India Bank Employees’ Association (AIBEA)	2
2.	National Confederation of Bank Employees (NCBE)	2
3.	Bank Employees’ Federation of India (BEFI)	1
4.	Indian National Bank Employees’ Federation (INBEF)	1
5.	National Organisation of Bank Workers (NOBW)	1
6.	All India Bank Officers’ Confederation (AIBOC)	2
7.	All India Bank Officers’ Association (AIBOA)	1
8.	Indian National Bank Officers’ Congress (INBOC)	1
9.	National Organisation of Bank Officers (NOBO)	1

3. Kindly confirm participation with details of the participants

Yours faithfully,

S K Kakkar

Senior Advisor (HR&IR)

Source: http://banknewskumar.blogspot.in/

IBA Invites UFBU For Negotiations On Wage Revision Fixed On 21.2.2018

IBA Invites UFBU for Negotiations on Wage Revision fixed on 21.2.2018

Date:09.02.2018

Central Office:

R-8/38 Raj Nagar

Ghaziabad (U.P.)

Camp Office:

Punjab National Bank

Preet Vihar, Delhi-92

Ph. /Fax No: 0120-4136800 Mobile (G.S.): 9818562336

E-mail: aipnbsf@yahoo.co.in Website: www.aipnbsf.org

Circular No. 2/2018
TO ALL MEMBERS

Dear Comrades.

• UFBU MEETING HELD ON 6TH FEBRUARY 2018

• UFBU DECIDES ALL INDIA STRIKE ON 15TH MARCH 2018

• IBA INVITES UFBU FOR NEGOTIATIONS ON 21ST FEBRUARY 2018

We reproduce hereunder the Circular No. UFBU/2018/01 Dated the 9th February 2018 issued by Com. Sanjeev K. Bandlish, Convenor, United Forum of Bank Unions (UFBU), for information of all affiliates and members.

With revolutionary greetings,

Yours Comradely,

(R. K. SHARMA)
GENERAL SECRETARY

In the background of virtual silence on the part of IBA to hold negotiations with UFBU on our current demands for revision of wages and services conditions, a meeting of UFBU was held at Mumbai on the 6th February 2018.

Delay in wage revision: The meeting was concerned to note that for the past three months, IBA has not held any meeting with us on our demands for wage revision despite assuring us in the meeting held in October, 2017 that shortly another meeting would be held when the IBA would make their offer. So far, there has been no response. Department of Financial Services of Government of India has also been communicating to all the Banks and IBA to conclude the settlement without delay. Even this has been ignored. Regrettably, when we took up the matter with the Government to intervene to expedite the settlement, there was no response. Hence, it was decided after due deliberations that agitational programmes including strike actions have to be resorted to.

Strike call: Accordingly, it was decided to give the call for All India Strike on the 15th March 2018 preceded by other protest programmes like deputation to Chairperson IBA, demonstrations, mass rallies, Badge wearing, Dharna, etc.

IBA invites UFBU for Talks: After our taking the decision on the 6th February 2018, we have been informed by the IBA vide their letter dated the 7th February 2018 that the next round of negotiations on our demands for wage revision has been fixed for the 21st February 2018.In view of this, we shall take part in the negotiations on 21.02.2018 to impress upon the IBA to expedite the settlement. Looking to their response in the meeting on 21st February 2018, UFBU will meet immediately thereafter and take the decision about our agitational programme and strike call.

Continued attacks on Banking Sector – Mass signature Campaign : Further to our successful protest strike on 22.08.2017 and the massive Morcha to Parliament on 15.09.2017, it was decided to undertake mass signature campaign in the Petition to Speaker of Lok Sabha to seek the support of the people to our demands. Already the draft Mass Petition has been circulated to units. The meeting observed that the units are in the process of collecting signatures from the general public and the response is encouraging.

It was decided to complete the campaign by the end of March 2018 so that the Mass Petitions can be handed over to the Speaker of Lok Sabha in the first week of April, 2018 before the conclusion of the surrent Budget Session.

Source: http://aipnbsf.org

IBA Circular - Subsidizing MDR Charges On Debit Cards

Subsidizing MDR charges on Debit Cards/BHIM UPI /AcPS transactions of value less than or equal to Rs.2000/-

(To be published in the Gazette of India, Extraordinary Part I, Section 1)

GOVERNMENT OF INDIA

Ministry of Electronics and Information Technology

New Delhi, the 27th December, 2017

NOTIFICATION

Subject: Subsidizing MDR charges on Debit Cards/BHIM UPI /AcPS transactions of value less than or equal to Rs.2000/-

No. 6(19)/2017 – DPD -1

1) The Digital India Programme envisions transforming India into a digitally empowered society and knowledge economy by making available digital infrastructure; digital governance and digital services to every citizen. Promotion of digital governance and digital services to every citizen. Promotion of digital payments ecosystem is an essential aspect of the Digital India programme and has the potential to transform India’s economy and extend inclusion of financial services to all those who remain excluded.

2) Finance Minister in his Budget Speech on February 1, 2017 had announced a target of 2,500 crore digital payment transactions for FY, 2017-18.

3) In the digital payments ecosystem, merchants play a very crucial role especially in a country like where nearly 90% of merchants are from the unorganized sector in the form of small grocery stores, local outlets, etc. Besides, there are vendors, auto/taxi drivers etc., who constitute a large share of unorganized merchants. The transaction amount at each of these merchants is generally small.

4) In the Debit Card/BHIM UPI/Aadhaar-Pay payment eco system, when any payment is made at a merchant Point of Sale (POS) through a POS machine or QR “scan & pay” or online mode of payment, Merchant Discount rate (MDR) charge is payable by the merchant to his bank (Acquirer). A portion of this is shared by the acquirer bank with the card issuing bank and the card network operator.

5) RBI has issued a directive on 6th December, 2017 revising MDR applicable for debit card transactions which will be effective from 01.01.2018 wherein merchant category wise differential MDR rates have been proposed for transactions.

6) It has been decided by the Government to reimburse the MDR charges on small transactions which are less than or equal to Rs. 2000/- in value so that such digital payment transactions are promoted. The MDR on such transactions for the merchant will effectively become zero and hence they will come on par with cash transactions. The salient features of the scheme are as follows:-

i) MDR applicable on Debit Card/BHIM UPI/Aadhaar-Pay transactions less than or equal to Rs. 2000/- in value will be borne by Government for a period of two years with effect from 1st January 2018 by reimbursement of the same to the acquirer banks so that no MDR is payable by the merchant in respect of such transactions. Accordingly, the banks shall not charge any MDR from merchants for all eligible transactions under this scheme and consequently the consumers will not be overcharged citing MDR as a reason.

ii) No MDR will be applicable in case of transaction value less than or equal to Rs. 2000/-. However, for transaction value above Rs. 2000/-, MDR would be applicable on the entire transaction value. For example, no MDR will be applicable in case of a transaction value of Rs. 1800 and in respect of a transaction of Rs.2300/- MDR would be applicbale on the entire transaction value of Rs.2300/-.

iii) Each acquirer bank has to ensure that in accordance with the relevant RBI instructions, there should be no “bundled” agreement with the merchants covering both debit cards & credit cards.

iv) In the line with the RBI instructions dated 6.12.2017, the agreements should include a clause that MDR charges should not be passed on by the merchants to the customers while accepting payments through debit cards / BHIM UPI / Aadhaar Pay.

v) Each acquirer bank will be required to submit their respective reimbursement claims in the format to be laid down.

vi) Such claim shall be accompanied with a certificate that the share of the MDR charges that is due to the issuer bank and the card network operator have been paid in full and the share of the acquirer bank has been clearly identified.

vii) For every quarer the acquirer banks should submit a report duly certified by their statutory auditors regarding the volume and value of the debit card / BHIM UPI / Aadhaar Pay transactions (showing on-us and off-us transactions distinctly)

viii) Along with the claim, the acquirer banks should submit to the RBI, a certificate from their auditor confirming that with respect to the claim under examination, MDR has neither been charged from the consumer by the merchant nor charged by the bank from the merchant in respect of the applicable low value transactions.

ix) The Scheme is applicable to banks having operations in India and transactions done in India.

x) The Committee set up to look into the issues relating to reimbursement of MDR to the acquirer banks with effect from 1.1.2018, has examinted the inputs from Indian Banks Association (IBA) and leading acquirer banks and has suggested a cap of 0.40% of value of total debit card transactions less than or equal to Rs.2000/- with regard to reimbursement of MDR on such low value transactions for a period of one quarter with effect from 1.1.2018. The committee has also recommended that a detailed consultative process for the reimbursement may be worked out.

xi) Therefore, for a period of one quarter starting from 1.1.2018 there will be a cap on MDR reimbursable to the acquirer banks which will be at 0.40% of the total value of the debit card / BHIM UPI / Aadhaar Pay transactions less than or equal to Rs.2000. If felt necessary this cap could be revisited thereafter.

xii) The reimbursement mechanism in respect of such low value transactions would be evolved through a consultative process involving the RBI, IBA and banks. Thereafter, the procedure for quarterly reimbursements of MDR to the Acquirer banks will be worked out and communicated to all concerned.

7) The banks are requested to ensure that the transition to this new scheme of MDR reimbursement for low value transactions w.e.f. 1.1.2018 is done smoothy without any hitch.

(Gopalakrishnan S.)

Joint Secretary

Tel: 24363075

Email:gopal@meity.gov.in

Authority: www.iba.org.in