Bank Pension From 1993 Agreement to Supreme Court

By Maninder Singh Bhatia on Bank Pension Updating

​The issue of pension updation for bank employees and pensioners is neither new nor a recently emerged matter. Its roots trace back to the historic Memorandum of Settlement dated October 29, 1993. This agreement was executed between the management of 58 banks—represented by the Indian Banks' Association (IBA)—and the bank employees' unions. A Supreme Court judgment also explicitly records the reference to this agreement and its Clause 12.​

The primary objective of this agreement was to introduce a pension scheme for bank employees. Under this settlement, pension was implemented as a second retirement benefit with an effective date of November 1, 1993. Provisions were also made regarding the pension rate, qualifying service, Dearness Relief, commutation, and other terms.

​However, the most crucial aspect of this agreement is Clause 12. It stated that provisions should be made in the pension scheme for the "updating" of pension, alongside other terms, and that these provisions should align with those prevailing in the Reserve Bank of India (RBI).

​Furthermore, the 1993 agreement specified that Dearness Relief for pensioners should follow the Dearness Allowance formula in effect at the RBI. This clearly demonstrates that the RBI pension model served as a vital reference point for the architects of the bank pension framework at that time.

​Subsequently, the Bank Employees' Pension Regulations were framed in 1995. From this point onward, the legal interpretation of pension updation grew increasingly complex. Later, Regulation 35(1) was amended in 2002, stating that basic pension and, wherever applicable, additional pension "shall be updated" as per the formula provided in Appendix-I.

​This became the main point of legal contention between pensioners and bank management/the government. Pensioners argued that if the 1993 agreement envisioned pension updation on the lines of the RBI and the 2002 amendment used mandatory phrasing like "shall be updated," the benefits ought to extend broadly to all pensioners. On the other hand, differing judicial opinions emerged across various court levels regarding its legal interpretation and scope.​

Writer M S Bhatia

Against this backdrop, the M.C. Singla case has gained significant prominence and is currently sub-judice before the Supreme Court. During the hearing on July 22, 2026, the Supreme Court specifically noted the argument that updation under the amended Regulation 35(1) of 2002 should apply to all employees, pointing out that this updation was omitted in calculating the annual pension of retired employees. The Court directed PNB to file an additional affidavit along with supporting documents, while also calling for relevant records spanning the 7th to 12th Bipartite Settlements.

​As of September 2026, the matter remains pending before the Supreme Court. The case was listed on September 9, but the hearing could not take place; according to information released by pensioner associations, efforts are underway to have it re-listed for the next hearing. Therefore, it would be premature to claim that the Supreme Court has delivered any final verdict in favor of pension updation.

​To fully understand this entire matter, the document of October 29, 1993, serves as a crucial historical piece of evidence. It clearly shows that "updating" was not excluded during the formulation of the pension scheme, but was explicitly incorporated into Clause 12 of the settlement.

​Today, with massive structural shifts in bank salary and pension calculations, the vital question for thousands of veteran pensioners is whether their pensions should also be updated periodically. The definitive legal answer now rests with the pending proceedings in the Supreme Court.

​Hence, the 1993 agreement is not merely a founding document for bank pensions, but a foundational pillar of the ongoing legal discourse on pension updation.

​(The author is a former banker, trade unionist, and social activist.)